In The Social Life of Financial Derivatives Edward LiPuma theorizes the profound social dimensions of derivatives markets and the processes, rituals, and belief systems that drive them. In response to the 2008 financial crisis and drawing on his experience trading derivatives, LiPuma outlines how they function as complex devices that organize speculative capital as well as the ways derivative-driven capitalism not only produces the conditions for its own existence, but also penetrates the fabric of everyday life. Framing finance as a form of social life and highlighting the intrinsically social character of financial derivatives, LiPuma deepens our understanding of derivatives so that we may someday use them to serve the public well-being.

The market for financial derivatives is far and away the largest and most powerful market in the world, and it is growing exponentially. In 1970 the yearly valuation of financial derivatives was only a few million dollars. By 1980 the sum had swollen to nearly one hundred million dollars. By 1990 it had climbed to almost one hundred billion dollars, and in 2000 it approached one hundred trillion. Created and sustained by a small number of European and American banks, corporations, and hedge funds, the derivatives market has an enormous impact on the economies of nations—particularly poorer nations—because it controls the price of money. Derivatives bought and sold by means of computer keystrokes in London and New York affect the price of food, clothing, and housing in Johannesburg, Kuala Lumpur, and Buenos Aires. Arguing that social theorists concerned with globalization must familiarize themselves with the mechanisms of a world economy based on the rapid circulation of capital, Edward LiPuma and Benjamin Lee offer a concise introduction to financial derivatives. LiPuma and Lee explain how derivatives are essentially wagers—often on the fluctuations of national currencies—based on models that aggregate and price risk. They describe how these financial instruments are changing the face of capitalism, undermining the power of nations and perpetrating a new and less visible form of domination on postcolonial societies. As they ask: How does one know about, let alone demonstrate against, an unlisted, virtual, offshore corporation that operates in an unregulated electronic space using a secret proprietary trading strategy to buy and sell arcane financial instruments? LiPuma and Lee provide a necessary look at the obscure but consequential role of financial derivatives in the global economy.

"Financial Derivatives" - Jetzt neu in der 3. komplett überarbeiteten Auflage! Dieses umfassende Nachschlagewerk bietet eine gründliche Einführung in das Thema Finanzderivate und ihre Bedeutung für das Risikomanagement im Unternehmensumfeld. Es vermittelt fundierte Kenntnisse zum Thema Finanzderivate, und zwar mit einem verständlich gehaltenen Minimum an Finanzmathematik, was Preisbildung und Bewertung angeht. Mit einer breitgefächerten Übersicht über die verschiedenen Arten von Finanzderivaten. Mit neuem Material zu Kreditderivaten und zur Kreditrisikobewertung bei Derivaten. Mit neuen und ausführlicheren Informationen zu den Themen Finanztechnik und strukturierte Finanzprodukte. "Financial Derivatives" - Ein unverzichtbarer Ratgeber für alle Finanzexperten im Bereich Risikomanagement.

The contributors to this volume draw upon their deep backgrounds in finance, the social sciences, arts, and the humanities to create a new way of understanding derivative capitalism that does justice to its technical, social, and cultural dimensions. The financial crisis of 2008 demonstrated both that derivatives are capable of producing great wealth and that their deregulation and privatization cannot control the risks that they produce. A popular reaction is to focus on the regulation or abolition of derivative finance. These authors take a different tack and instead raise the question: if we should want access to the wealth that derivatives are capable of producing, what kind of social institutions and policies would be needed to make such wealth production work for the benefit of all of us? Since this question goes to the very heart of what kind of society is most desirable, the volume argues that we need both a social understanding of the derivative and a derivative understanding of the social. The derivative reading of the social employs a small set of financial concepts to understand certain defining dimensions of contemporary reality. The central concept is that of volatility and its relations to risk, uncertainty, hedging, optionality, and arbitrage. The social reading of the derivative involves anthropological discussions of the gift, ritual, play, and performativity and provides us with frames of embodiment for analyzing, through action and event, the ways derivatives do their work.

Publisher Description

This book is a collection of original papers by Robert Jarrow that contributed to significant advances in financial economics. Divided into three parts, Part I concerns option pricing theory and its foundations. The papers here deal with the famous Black-Scholes-Merton model, characterizations of the American put option, and the first applications of arbitrage pricing theory to market manipulation and liquidity risk.Part II relates to pricing derivatives under stochastic interest rates. Included is the paper introducing the famous Heath-Jarrow-Morton (HJM) model, together with papers on topics like the characterization of the difference between forward and futures prices, the forward price martingale measure, and applications of the HJM model to foreign currencies and commodities.Part III deals with the pricing of financial derivatives considering both stochastic interest rates and the likelihood of default. Papers cover the reduced form credit risk model, in particular the original Jarrow and Turnbull model, the Markov model for credit rating transitions, counterparty risk, and diversifiable default risk.

Through the eyes of an inventor of new markets, Good Derivatives: A Story of Financial and Environmental Innovation tells the story of how financial innovation – a concept that is misunderstood and under attack - has been a positive force in the last four decades. If properly designed and regulated, these “good derivatives” can open vast possibilities to address a variety of global problems. Filled with provocative ideas, fascinating stories, and valuable lessons, it will provide both an insightful interpretation of the last forty years in capital and environmental markets and a vision of world finance for the next forty years. As a young economist at the Chicago Board of Trade, Richard Sandor helped create interest rate futures, a development that revolutionized worldwide finance. Later, he pioneered the use of emissions trading to reduce acid rain, one of the most successful environmental programs ever. He will provide unique insights into the process of creating these new financial products. Covering successes and failures, the story describes the tireless process of inventing, educating and creating support for these new inventions in places like Chicago, New York, London, Paris and how it is unfolding today in Mumbai, Shanghai and Beijing. The book will tell the story of the creation of the Chicago Climate Exchange and its affiliated exchanges (European Climate Exchange, Chicago Climate Futures Exchange and Tianjin Climate Exchange, located in China). The lessons learned in these markets can play a critical role in effectively addressing global climate change and other pressing environmental issues. The author argues that market-based trading systems are a far more effective means of reducing pollutants than “command-and-control”. Environmental markets may ultimately help to find solutions to issues such as rainforest destruction, water problems and biodiversity threats. Written in an engaging, narrative style, Good Derivatives will be of interest to both practitioners and general readers who want to better understand the creative process of financial innovation. In the middle of so much distrust of markets, it is also a recipe of how transparent, well-regulated markets can be a force for good in the environmental, health, and social areas.

Risk Takers: Uses and Abuses of Financial Derivatives goes to the heart of the arcane and largely misunderstood world of derivative finance and makes it accessible to everyone—even novice readers. Marthinsen takes us behind the scenes, into the back alleyways of corporate finance and derivative trading, to provide a bird’s-eye view of the most shocking financial disasters of the past quarter century. The book draws on real-life stories to explain how financial derivatives can be used to create or to destroy value. In an approachable, non-technical manner, Marthinsen brings these financial derivatives situations to life, fully exploring the context of each event, evaluating their outcomes, and bridging the gap between theory and practice.

Catastrophes ranging from the travesties of financial markets and the explosion of the Deepwater Horizon oil well to the tsunami that struck northern Japan and the levees breaking in New Orleans are examples of the limits of knowledge. Author Randy Martin insists that the expertise erected to prevent these natural and social disasters failed in each case. In Knowledge LTD, Martin explores how both the limits of knowledge and the social constructions of culture reflect the way we organize social life in the face of disasters and their aftermath. He examines this crisis of knowledge as well as the social movements that rose up in its wake. Martin not only treats derivatives as financial contracts for pricing risk, but also shows how the derivative works in economic terms, where the very unity of the economy is undone. Knowledge LTD ultimately points to a more comprehensive reordering of the once separate spheres of economy, polity, and culture. Martin provides a new way of understanding the social significance of the all-pervasive derivative logic.

A step-by-step explanation of the mathematical models used to price derivatives. For this second edition, Salih Neftci has expanded one chapter, added six new ones, and inserted chapter-concluding exercises. He does not assume that the reader has a thorough mathematical background. His explanations of financial calculus seek to be simple and perceptive.