Elasticity Theory of Structuring
16 Pages Posted: 10 May 2013 Last revised: 19 Dec 2016
Date Written: April 23, 2013
Financial derivatives have often been criticized as casino-style betting instruments. It turns out that many naive ways of making them are indeed equivalent to gambling. Fortunately, this inadvertent effect can be understood and prevented. We present a theory of product design which achieves that.
Keywords: Optimal investments, structuring, financial derivatives, risk aversion
JEL Classification: C00, D83, G00
Suggested Citation: Suggested Citation