Publication Type
Journal Article
Version
acceptedVersion
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
Keywords
Investment decisions, risks, 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
Citation
KOH, Benedict S. K.; KOH, Francis; LEE, David K. C.; LIM, Kian Guan; NG, David; and PHOON, Kok Fai.
A risk- and complexity-rating framework for investment products. (2015). Financial Analysts Journal. 71, (6), 10-28.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/5311
Copyright Owner and License
Authors / SKBI
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.2469/faj.v71.n6.2