amlay

How to use Of Derivatives in Portfolio Management?

Hi everybody! My teacher asked this question during the lecture and I am curious to know.
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rogerpapa
"The Use of Derivatives In Portfolio Management - Restructuring asset portfolios with forward contracts – shorting forward contracts – tactical asset allocation to time general market movements instead of company-specific trends – hedge position with payoffs that are negatively correlated with existing exposure – converts beta of stock to zero, making a synthetic T-bill, affecting portfolio beta - Protecting portfolio value with put options – purchasing protective puts – keep from committing to sell if price rises – asymmetric hedge – portfolio insurance - Caution on Use: Either hold the shares and purchase a put option, or sell the shares and buy a T-bill and a call option -Factors Contributing Growth of Derivatives - Increased volatility in asset prices in financial markets - Increased integration of national financial markets with the international markets - Marked improvement in communication facilities and sharp decline in their costs - Development of more sophisticated risk management tools, providing economic agents a wider choice of risk management strategies - Innovations in the derivatives markets, which optimally combine the risks and returns over a large number of financial assets leading to higher returns, reduced risk as well as transactions costs as compared to individual financial assets.Source: http://in.docsity.com/en-docs/Introduction_to_Derivatives_-_Security_Analysis_and_Portfolio_Management_-_Solved_Quiz_"
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ekmbr
Some sort of ' group involving analysts and scientists, and so are finally in charge of setting up a smart investment method, picking ideal ventures and also allocating each expenditure adequately to get a finance- or perhaps asset-operations automobile.
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