Harvard and Yale in particular expanded their endowments' investments beyond the traditional bounds of fixed-income and equities and into exotic financial instruments like derivatives, hedge funds and leveraged investment products.
Derivatives are financial instruments whose value is based on some underlying asset, like a mortgage for instance, and and can be used to either hedge risk or for completely speculative positions.
Institutional traders may need to be effective traders not just of forex, but also of commodities, options, derivatives and other financial instruments.
Anyone who has followed the crisis will understand that the real economy of businesses and commodities is being upstaged by complicated financial instruments known as derivatives.
That's a nice way of saying that during recent years the Harvard Management Company, the university's investment subsidiary, diverted large portions of the university's endowment assets out of safe but poky low-yield securities (as of last June fixed-income investments accounted for only 16% of Harvard's portfolio) and into what this Forbes story describes as "exotic financial instruments": derivatives, hedge funds, private equity partnerships, commodities and emerging-market equities.
As you know, part of what led to this crisis was firms like AIG and others who were making huge and risky bets, using derivatives and other complicated financial instruments, in ways that defied accountability, or even common sense.
WHITEHOUSE: President Obama Tells Wall Street to Back Reform
There are plenty of financial instruments today, such as derivatives and futures, for those who want the rushes and crashes of high-octane trading.
The development of new financial instruments, such as credit derivatives, has also helped to shift risk from the banks to insurance companies, pension funds and others.
For IntercontinentalExchange ( ICE), it has the capability and could stand to benefit from an increase in exchange-traded products, including derivatives, futures and other financial instruments.
FORBES: Despite Fourth Quarter Weekness, ICE Shares Take Off
For financial instruments, such as stock options and many other derivatives, this was often (conveniently) zero, or close to it.
The loophole in question has to do with derivatives, those infamous instruments often blamed for taking the financial system to the brink.
These instruments are called 'derivatives' because they derive from an underlying financial asset - in this case, share prices.
应用推荐