Learning Curve

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which became law on April 20, 2005, significantly revises many provisions of the U.S. Bankruptcy Code.

The vast majority of synthetic structured finance collateralized debt obligations are cash-settled and these require a market valuation process to determine the percentage loss following several types of credit event.

China's domestic stock market--also known as the A-share market--has been trading around its multi-year low of late.

Most structured products and derivative securities are not registered with the Securities and Exchange Commission because they are targeted at sophisticated investors.

In two separate initiatives at the end of last year, the New Zealand Government signalled impending law reform that will impact the derivatives industry.

There is a growing interest among banking institutions to invest in capital-protected notes linked to hedge fund indices, hedge fund-of-funds and equity indices.

Derivatives transactions generally are entered into via telephone conversations and subsequently confirmed in writing.

In this two-part Learning Curve, we describe how dividends impact some of Europe's most liquid convertible bonds, how dividend protection features in certain convertibles may compensate holders for this risk (to some extent), how to estimate the resulting dividend sensitivity (µ) of convertibles and strategies for hedging the dividend risk in convertibles, including relatively new products such as dividend swaps.

Convertible bond holders are generally short dividend risk.

In the U.S. most market participants lend and borrow securities through repurchase agreements.

Despite the fourth-quarter uptick in the equity markets, investors have largely endured a difficult year.

Investment banks are increasingly turning to offshore synthetic structured solutions for their funding, regulatory capital and accounting treatment requirements.