Synthetic and Structured Assets

Financial activities have been a part of the global economic framework for centuries. Lending, borrowing, speculating, investing, and hedging, for instance, have been employed for years by a broad range of institutions in order to achieve specific financial goals. With progress emerging over the past few years in derivatives valuation methods, technology, legal structuring, market liquidity, cross border capital flows, and financial creativity, a new class of increasingly customized financial assets has developed. It is now common for institutions, which once relied on basic capital-raising and investment instruments, to turn to these sophisticated assets to achieve their goals. Synthetic and Structured Assets is a new book that focuses on customized financial instruments created specifically to meet the risk and investment needs of market participants.  

The text explores the mechanics and applications of synthetic and structured assets – or assets that are created, decomposed or restructured in order to alter, replicate, or enhance cash flows to meet end-user requirements. Product coverage includes:

• Callable, Puttable and Stripped Securities
• Mortgage and Asset-Backed Securities
• Structured Notes and Loans
• Collateralized Debt Obligations
• Insurance-Linked Securities and Contingent Capital
• Convertible Bonds and Equity Hybrids
• Investment Funds
• Derivative Replication, Repackaging, and Structuring

The text also provides in-depth coverage of the financial building blocks used to create synthetic and structured assets, as well as the legal, risk, and financial control parameters that form a key part of the evaluation and management process.