Do you know what derivatives are and do they produce anything of value?
Greetings! Well, here is a bankruptcy question that will help answer a common query. Good luck!
Also know as swaps market and can you explain how they fit into the capitalism model?
That was just the bankruptcy question I was looking for. Great answers, too. With any luck, it was the one you were searching for, as well.
Have a productive day!
Tags: bankruptcy
November 30th, -0001 at 12:00 am
Derivatives conceivably allow contracting parties to hedge against unforeseen risks in the marketplace. By stripping away, segregating, and selling (and sometimes bundling) the risk(s) of extreme fluctuations that would undermine the investment motivation, derivatives conceivably enhance the certainty of (supposedly reasonable) investment backed expectations for parties to executory, contingent, and/or aleatory contracts.
More predictability and accountability, means more investment and a bigger overall market.
The problem with derivatives, CDOs, and CDS is that the government bails out the most reckless investors/speculators like AIG. If the federal government would’ve allowed AIG to seek bankruptcy protection, the message would be loud and clear to the market: caveat emptor. Instead, we are condemned to endure another AIG bailout in the future because we refuse to adhere to the principle of creative destruction.
November 30th, -0001 at 12:00 am
Derivatives are futures contracts and option contracts.
They simply create a zero sum game of GAMBLING on the performance of other markets.
One guy bets wheat prices will fall… and one guy bets wheat prices will rise… and now you have the makings of a derivatives market. It can be applied to just about any financial decision you could make a bet on. There is always a winner… and always a loser… as though the players were sitting at a green felt gambling table instead of the Chicago Mercantile…. because the outcome is the same.
They literally create nothing.
November 30th, -0001 at 12:00 am
Derivatives are futures contracts and option contracts.
They simply create a zero sum game of GAMBLING on the performance of other markets.
One guy bets wheat prices will fall… and one guy bets wheat prices will rise… and now you have the makings of a derivatives market. It can be applied to just about any financial decision you could make a bet on. There is always a winner… and always a loser… as though the players were sitting at a green felt gambling table instead of the Chicago Mercantile…. because the outcome is the same.
They literally create nothing.
November 30th, -0001 at 12:00 am
Derivatives are a broad category that include speculation as well as hedging done by a lot of entities ranging from farmers to commercial airlines. Tough to answer such a broad question. If the question is, Should a speculator be allowed to hedge? my anser is yes.
November 30th, -0001 at 12:00 am
Kind of, and not really. Derivatives are kind of like insurance policies on investments. The only thing of value they provide is the opportunity to gamble capital on whether or not someone else’s investment will pay out or collapse.
November 30th, -0001 at 12:00 am
Kind of, and not really. Derivatives are kind of like insurance policies on investments. The only thing of value they provide is the opportunity to gamble capital on whether or not someone else’s investment will pay out or collapse.
November 30th, -0001 at 12:00 am
Yes, it is a neat way to steal money from people who are stupid enough to dream that they are investing when they are speculating. Sort of like buying ETFs.
November 30th, -0001 at 12:00 am
Yes, it is a neat way to steal money from people who are stupid enough to dream that they are investing when they are speculating. Sort of like buying ETFs.
November 30th, -0001 at 12:00 am
it’s called google.
November 30th, -0001 at 12:00 am
yes
November 30th, -0001 at 12:00 am
its what smart people came up with to cheat people dumber than they are.
November 30th, -0001 at 12:00 am
its what smart people came up with to cheat people dumber than they are.