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Here - Connecticut Insurance Law Journal
Here - Connecticut Insurance Law Journal

... Persistently high profits on “insurance” for small value losses sold as an add-on to other products or services (such as extended warranties sold with consumer electronics, loss damage waivers sold with a car rental, and credit life insurance sold with a loan) pose a twofold challenge to the standar ...
Credit ratings and credit risk: Is one measure enough?
Credit ratings and credit risk: Is one measure enough?

... rating. The increase in default probability during recessions and …nancial crises (‘bad times’) is more pronounced for lower rated (high failure beta) …rms. Investors demand compensation for the exposure to this risk –we …nd that variation in failure beta explains 93% of the variation in CDS risk pr ...
Key Credit Factors For The Regulated Utilities
Key Credit Factors For The Regulated Utilities

... significantly affect sales levels at times over the short term. However, those factors even out over time, and there is little pressure on margins if a utility can pass higher costs along to customers via higher rates. ...
IFRS 17 Insurance Contracts
IFRS 17 Insurance Contracts

... accompanying guidance to make its intentions clear and to reduce the risk of inconsistent application. For example, the application guidance in IFRS 17 specifies that when observable market rates for an instrument with the same characteristics are not available, or observable market rates for simila ...
The Employment Cost of Sovereign Default
The Employment Cost of Sovereign Default

... have difficulty in replicating. First, high debt-to-GDP ratios are sustained because persistent unemployment creates an additional disincentive to default and so increases average indebtedness. Defaulting entails prolonged costs because new matches take time to form. Lowering the labor market fricti ...
Auditing complex financial instruments
Auditing complex financial instruments

... International Standards on Auditing (ISAs) (UK and Ireland). The APB develops guidance in Practice Notes to assist auditors apply ISAs (UK and Ireland) and to indicate best practice in other areas; Practice Notes reflect existing auditing standards and regulatory requirements. As they do not introdu ...
LINCOLN NATIONAL CORP
LINCOLN NATIONAL CORP

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Wealth Distribution with State- dependent Risk Aversion
Wealth Distribution with State- dependent Risk Aversion

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IOSR Journal of Business and Management (IOSR-JBM)

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Household Heterogeneity and Incomplete Financial Markets: Asset Return Implications in a

... averse. In order to assess the effects of the two objectives independently of the financial market structure, the model is first solved under the assumption that households are identical in all respects. In this case, we are able to find conditions under which the two objectives have locally the same ...
Download Dissertation
Download Dissertation

... the firm’s capital structure, firms with lower credit quality are likely to have more sever creditor coordination problems. This is due to the fact that when the credit quality of the firm is lower, strategic uncertainty on actions of other creditors tends to increase. Prior studies also suggest tha ...
INFORMATION STATEMENT of BNP Paribas, a French incorporated
INFORMATION STATEMENT of BNP Paribas, a French incorporated

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Chapter 28 Investment Policy and the Framework of the CFA Institute
Chapter 28 Investment Policy and the Framework of the CFA Institute

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NBER WORKING PAPER SERIES THE ASYMMETRIC EFFECTS OF FINANCIAL FRICTIONS
NBER WORKING PAPER SERIES THE ASYMMETRIC EFFECTS OF FINANCIAL FRICTIONS

... signals about conditions are generated, and the learning that fuels recoveries is slower. The larger rise in lending rates combined with their slower recovery means greater asymmetry in the movements of lending rates and economic activity in economies with frictions. I reach these conclusions by ex ...
Determination of Risk Aversion and Moment
Determination of Risk Aversion and Moment

... The study briefly shows how to translate these preference patterns into option strategies that are added to the portfolio. For the skewness analysis the traditional Pratt-Arrow measure of risk aversion is extended to a three moment risk premium. The study exemplifies how to proceed when determining ri ...
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Oxera (2011) “Discount rates for low

... firms’ or investors’ required returns (‘hurdle rates’), for a number of reasons: its underlying assumptions may not be appropriate in certain contexts; its use of historical (as opposed to purely forward-looking) data; and its relatively poor results in empirical testing. Moreover, investors that ar ...
Sovereign and corporate credit risk
Sovereign and corporate credit risk

... steadily increase again in countries facing fiscal strain (Belgium, Italy, Portugal, and Spain), following concerns about rising government deficits. Sovereign risk rises in the second half of 2011 also in fiscally virtuous economies (Finland, France, Germany, and the Netherlands), although their CD ...
Opaque Financial Reporting due to Unemployment Concerns
Opaque Financial Reporting due to Unemployment Concerns

... insurance and opacity. These results mitigate concerns about endogeneity. We also consider potential nonlinearity between unemployment insurance benefits and opacity. In particular, we conjecture that unemployment insurance is likely to have a more salient effect on financial reporting decisions wh ...
The Financial Intermediation Premium in the Cross Section of Stock
The Financial Intermediation Premium in the Cross Section of Stock

... and growth may be illusory, because highly levered financial intermediaries are more susceptible to negative shocks to their assets, as their equity is not sufficiently high to absorb these shocks (Haldane et al., 2010). When aggregate economic conditions deteriorate, high-leverage financial interme ...
Competition, Reach for Yield, and Money Market Funds
Competition, Reach for Yield, and Money Market Funds

... that solves a tournament model with a continuum of players in a fully analytic way without first-order approximations. ...
The Internal Ratings-Based Approach
The Internal Ratings-Based Approach

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Joint Center for Housing Studies Harvard University
Joint Center for Housing Studies Harvard University

... spike in early payment defaults made clear that increasing numbers of homeowners could not afford their monthly mortgage payments even at the initial interest rates. Some of these loans were infected with fraud or sloppily underwritten from the start, especially reduced documentation loans. The wide ...
International Diversification Versus Domestic Diversification: Mean
International Diversification Versus Domestic Diversification: Mean

... and Rose [33] find that international diversi-fication can be advantageous and forms a means for managing crises in developed markets. Carrieri, Errunza, and Sarkissian [34] show that greater diversification gains can potentially be achieved if local industry investment is country specific and that ...
Central clearing: reaping the benefits, controlling the risks
Central clearing: reaping the benefits, controlling the risks

... of certain PFMI requirements, including on: • explicit board responsibilities and disclosure mechanisms regarding CCPs’ financial risk governance to promote both closer senior level scrutiny and involvement of relevant stakeholders; • rigorous stress-testing on the basis of more detailed guidance ...
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Moral hazard

In economics, moral hazard occurs when one person takes more risks because someone else bears the burden of those risks. A moral hazard may occur where the actions of one party may change to the detriment of another after a financial transaction has taken place.Moral hazard occurs under a type of information asymmetry where the risk-taking party to a transaction knows more about its intentions than the party paying the consequences of the risk. More broadly, moral hazard occurs when the party with more information about its actions or intentions has a tendency or incentive to behave inappropriately from the perspective of the party with less information.Moral hazard also arises in a principal–agent problem, where one party, called an agent, acts on behalf of another party, called the principal. The agent usually has more information about his or her actions or intentions than the principal does, because the principal usually cannot completely monitor the agent. The agent may have an incentive to act inappropriately (from the viewpoint of the principal) if the interests of the agent and the principal are not aligned.
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