Question

trading financing

The risk management process

The most complicated risk management structure can be broken down into components that any high school graduate should be able to undershand throughly.Ph..D.swith various specialties-the “rocket scients” described in the press-play an important role in financial risk management. Nonetheless, a Ph.D. is not necessary to undershtand any single aspect of financial risk or to evaluate the overall effectiveness of risk control.
In our simplified stock market example, options can help the issuer trade some of the possible opportunity gain from a falling stock price for protection from the opportunity loss associated with a rising stock price. Correspondingly, the investor can use options to exchange some of her upside potential for downside protection. Convertible bonds and some equity offerings like preference equity redemption cumulative stock (PERCS) have risk-reallocating option provisions embedded in the security itself. The market maker can buy options for protection from large price movement in either direction.
If price or rate risk were the only kind of risk, there would be no controversy over the market in risk management agreement of any kind . After all, consenting adults are simply exchanging cash flows, and they expect these exchanges to improve or protect their financial well-being.
When customized risk management contracts transfer financial risks from one party to another, the process often leads to the mistaken view that these instrument are used exclusively to reduce some specific risk element, and that the financial intermediary who creats the product of facilitates the risk exchange is acting as a reservoir for risk absorption. Actually, the creator of the product is primarily a provider of liquidity. The financial intermediary typically disaggregates, repackages, and redistributes risks and their corresponding rewards to other market participants.
For example, one contract may insulate a pension or profit-sharing plan from a downside stock market move. Another contract may transfer equivalent stock market exposure to an investor who expects substantial cash inflows in the near future, and who wants immediate participation in stock prices. The intermediary who handles the transfer is not talking any increased stock price risk.
The financial intermediary who sells risk management products is the ultimate risk manager, but not the ultimate risk-taker. In addition to managing risk balanced “books” in one or a variety of markets, the financial intermediary is sharply attuned to the credit of counterparties. Cash securities markets and exchange-traded option and futures contracts are used extensively by the providers of linking specific customer needs through cash market and exchange-traded and OTC derivatives—provides liquidity to international capital markets.

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Answer 1

风险管理过程

最复杂的风险管理结构可细分到部件，任何高中毕业生应该能够undershand throughly.ph .. d.swith各专业- “火箭scients ”形容，在新闻中发挥重要作用的金融风险管理。然而，博士学位是没有必要undershtand任何单一方面的金融风险或评估的整体成效，风险控制。
在我们的简化股票市场为例，选项可以帮助发行贸易一些可能的机会从中获益下降的股票价格保护，从机会与相关的损失有上升的股票价格。相应地，投资者可以使用选项来交换她的一些成长潜力，为下档保护。可换股债券和一些股票的产品一样，偏好股权赎回的累积股票（ percs ）有风险的重新选择的规定，嵌入在担保本身。做市商可以购买选择的保护从大的价格运动在任一方向。
如果价格或利率风险的人只会种风险，不会有任何争议，市场风险管理的协议，任何形式的保证。毕竟，成年人彼此同意纯粹是交换现金流量，他们期望这些交流，以改善或保护他们的金融福祉。
当定制的风险管理合同，转让金融风险，从一个给另一个政党，过程中往往导致错误的认为，这些仪器是专门用于减少了一些具体的风险因素，以及金融中介谁creats的产物，有利于风险交流是署理作为一个水库的风险吸收。其实，造物主的产品主要是供应商的流动资金。金融中介机构通常disaggregates ， repackages ，并重新分配风险及其相应的奖励其他市场参与者。
举例来说，一个合约可能绝缘退休金或利润分享计划，从坏处股市动议。另一份合约可能转移相等于股市接触到一个投资者谁预计大量的现金流入，在不久的将来，谁愿意立即参与，在股票的价格。中介谁处理的转让是不是说任何增加，股票价格风险。
金融中介机构谁销售风险管理产品是最终的风险管理，但不是最终的风险taker 。此外，以风险管理平衡“图书”在一个或多个市场，金融中介机构是急剧切合信贷的对手。现金证券市场和交易所买卖期权和期货合约是广泛使用的供应商联系起来的特定的客户需求，通过现货市场和交易所交易和场外交易衍生工具-提供流动资金，以国际资本市场。