infonet-economy

Regulators dedicate much attention to a financial institution’s option to default, i.e. the option that distressed financial institutions have to transfer losses to their creditors. It is generally recognized that the existence of this option provides intermediaries with a powerful incentive to keep firm capital close to the minimal requirement. We argue, however, that...

1914 und 2014: Ein Jahrhundert ist es her, seit die europäische und vor allem französische und deutsche Jugend auf den Schlachtfeldern des Ersten Weltkriegs geopfert wurde. Heute gibt es in Europa glücklicherweise keine Schützengräben mehr, doch die aktuellen Generationen leiden unter einer Finanzkrise, die seit 2007 andauert und die Zukunftsperspektiven überschattet. Damals lehnte...

We present an overview of corporate-finance models where firms are subject to exogenous market frictions. These models, albeit quite simple, yield reasonable predictions regarding financing, pay-outs and default, as well as asset-pricing implications. The price to pay for the said simplicity is the need to use non-standard mathematical techniques, namely Singular and Impulse...

Puts and calls on S&P500 futures are bought and sold for various purposes including speculation, hedging and portfolio insurance. We investigate the rate of return from buying or selling these options from the start of options trading in 1985 until 2010. These rates of return are variable and depend upon the trading horizons, the level of the VIX volatility index, whether the...

The financial system performs vital functions for the world economy. Very often one of more aspect of this system can be described by means of a complex graph. In this chapter under the generic name of financial networks we indicate several different systems all related to the world of finance.