Publication Type

Journal Article

Publication Date

11-2015

Abstract

Many investors who bought such investments as Lehman Brothers’ minibonds did not understand the products’ complicated features. This fact suggests that if the inherent risk and complexity of products’ structure are not clearly understood by investors, they will be unable to make informed decisions. Some practitioners have recently attempted to calibrate product complexity. The authors propose a framework for classifying investment product risk and complexity separately with a list of factors that contribute to these attributes. They demonstrate the framework’s simplicity and usefulness in helping investors make informed decisions, showing that it can be used to calibrate a variety of investment products

Discipline

Finance and Financial Management

Research Areas

Quantitative Finance

Publication

Financial Analysts Journal

Volume

71

Issue

6

First Page

10

Last Page

28

ISSN

0015-198X

Identifier

10.2469/faj.v71.n6.2

Publisher

Chartered Financial Analysts Institute

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://dx.doi.org/10.2469/faj.v71.n6.2

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