In recent times, derivatives have been inaccurately labelled thefinancial weapons of mass destruction responsible for the worstfinancial crisis in recent history. Inherently complex and perilousfor the ill-informed investment professional they can however alsobe gainfully harnessed.
This book is a practical guide to the complexities of exoticproducts written in simple terms based on the premise thatderivatives are not homogenous, and not necessarily dangerous.
By exploring common themes behind the construction of variousstructured products in interest rates, equities and foreignexchange, and investigating the economic environment that promotedthe explosive growth of these products, this book will help readersmake sense of their relevance in this period of economicuncertainty. Subsequently, by explaining exotic products withsimple mathematics, it will aid readers in understanding theirpotential use in certain investment strategies whilst having a firmcontrol over risk.
Exotic products need not be inaccessible. By understanding theproducts available investors can make informed decisions ensuringfeatures are consistent with their investment objectives and riskpreferences. Author Chia Chiang Tan takes readers through the risksand rewards of each product, illustrating when products can damageinvestment strategies and how to avoid them, leading to suitable,profitable investments.
Ultimately, this book will provide practitioners with anunderstanding of derivatives, enabling them to determine forthemselves which products will fit their investment strategy, andhow to use them based on the economic environment and inherentrisks.