The Elements of Financial Engineering


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–          Embodies the notion that there are a few elemental building blocks or financial contracts that can be combined in a rigorous fashion  to produce an almost unlimited variety of non-standard cash flow expectations.

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–          Conceptually, the idea is that all familiar financial securities ca be thought of as having some combination of;

  1. Credit extension (such as loans, bonds, etc.)
  2. Price fixing (such as futures / forward contracts)
  3. Price Insurance (such as call / put options)

–          The invention of new or hybrid financial securities to fit exactly some requirement of an individual financial market participant is a matter of combining these elements into a package of claims that will produce a profile of cash flow expectations meeting this need.

 

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BMS Team

We, at BMS.co.in, believe in sharing knowledge and giving quality information to our BMS students. We are here to provide and update you with every details required by you BMSites! If you want to join us, please mail to contact@bms.co.in.

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