By
Dimitris Chorafas, Independent Finance Consultant, France
Description
This book has two themes: Private Banking and investment decisions regarding Structural Financial Products. Dr. Dimitris Chorafas examines
in a rigorous way whether structured financial products are advisable investments for retail and institutional investors and, if yes,
which risks they entail. As our society becomes increasingly affluent, and state-supported pension schemes find it difficult to survive,
a growing number of high net-worth individuals, and families, have become retail investors – looking for ways and means to optimize wealth
management, and Private Banking deals with these sorts of clients. Private banking also deals with clients that are institutional investors,
such as pension funds, mutual funds, and insurance companies, as well as not-for-profits, foundations and companies explicitly set up
for wealth management. Both institutional and retail investors are being offered by the banks they work with structured products. Typically,
these are securities that provide them with a redemption amount, with may be either with full or partial capital protection, and some
type of return. The book examines structured financial products, their polyvalent nature, and the results which could be expected from
them.
Return on structural instruments, which are essentially derivatives, is paid in function of a specific investment strategy on
selected underlying asset(s). This essentially means on the performance of the underlyings, obtained by asset managers, which may be
banks or hedge funds, through purchase or sale of embedded options. But there are risks. Both risk and return from structured products
are related to three main issues: the volatility of future value of an underlying, the uncertainty of future events, and the exposure
of the product. Every type of investment is subject to market forces, and the more leveraged a portfolio is, the greater will probably
be both the assumed risk and the expected reward. The fact that structured financial products appeal, or at least are being marketed,
to both retail investors and institutional investors makes the dual approach deliberately chosen in this book most advisable. This book
addresses all these issues in a practical manner with numerous case studies and real-world examples drawn from the author’s intensive
research.
Audience:
At the institutional side are the practitioners and professionals, from treasurers to operational executives, risk management officers
and their staff, as well as auditors and financial analysts; investment consultancies; accountancies; auditing firms, independent rating
agencies, and central bankers.
