A Risk Neutral Framework For The Pricing Of Credit Derivatives :: Business Finance Essays

A Risk Neutral Framework For The Pricing Of Credit Derivatives 1. INTRODUCTION Considerable research effort has gone into Credit Derivatives since the early 1990’s. The roots of credit derivatives can be traced back to the notion that the credit risk of a firm can be captured by the credit rating ascribed to it. This premise is also the cornerstone of loan pricing and credit risk management models the world over, including J.P. Morgan’s CreditMetricsTM. Empirical research enables the predictability of the event of default as well as the Loss in the Event of Default (LIED). This information is expressed in terms of a ‘transition matrix’ - a matrix that traces out the probabilities the migration of a firm’s credit rating. Rating agencies such as Standard & Poor (S&P) provide transition matrices computed from periods of data about bonds - default record and post-default behaviour in the US markets. Lack of adequate data precludes the computation of such matrices in the Indian context, although it is possible to map ratings of Indian rating agencies such as CRISIL onto S&P ratings. 2. TYPES OF CREDIT DERIVATIVES Here is a brief description of some popular types of credit derivatives: 2.1 Credit Default Swaps A credit default swap provides a hedge against default on some payment, such as a bond. The counterparty buying credit protection pays the provider a certain amount in return for a guarantee to make good the loss in the event of default. 2.2 Total Return Swaps In this contract, the ‘payer’ gives a ‘receiver’ the total return on an asset in return for the returns on a benchmark asset, typically a risk-free asset. The payer has thus eliminated the risk of default in return for a lower but certain risk-free rate of return. 2.3 Credit Spread Derivatives Credit spread derivatives take the form of credit spread options, forwards or swaps. A credit spread call option, for example, is a call option written on the level of the spreads for a given bond. The option, thus increases in value as the spread increases, so that the value of the bond is protected. 3. RISK-NEUTRALITY Hypothesising the existence of a ‘risk-neutral’ world is extremely useful in the pricing of instruments whose value is derived from a stochastic process. In the real world, the present price is less than the expected net present value of the likely outcomes in future. Thus, for example, if the price of a commodity can become either Rs.

Exceptionally Able/Gifted Children Essay

Definition: a child who shows exceptional ability in one or more areas mathematical, verbal, spatial awareness, musical or artistic ability. These children have an IQ of 130 or above. This is the top 2% of the population in Ireland. Characteristics of Gifted Learners: * Keen powers of observation – noticing details other children of the same age would miss, including non-verbal cues. * Develop skills quicker – gifted children learn to read, walk and talk quicker than other children. * Intellectual curiosity – wanting to know everything about everything – objects, ideas, situations, or events. Gifted children are always asking the ‘bigger’ questions, especially about the world and God. * Good memory – often have a large storehouse of information about a variety of topics, which they can recall quickly. Causes of Gifted Learners: * This is a cause of great debate between psychologists. * Some people believe that gifted learning is inborn, where the child was born with high ability in one area. * Others believe that gifted learning is a by-product of deliberate practice. For example, if a child is surrounded by music and plays an instrument from a young age, then this child is more likely to be gifted in this area than others. Consequences of Gifted Learners: * Boredom – teachers often forget about gifted children. The children get distracted easily or get bored as the work is too low of standard. * Perfectionism – gifted children want to strive for perfection but often fail to attain their own high standards. * Sensitivity – a gifted 7 year old may have the intellectual ability of a 17 year old but the emotional ability of a 4 year old. * Alienation – a gifted learner’s outlook in life is very different to their peers. Because of this they may struggle to gain and maintain friendship with peers. Tips for teaching * Gifted children have special educational needs. Regular school work may not provide sufficient challenge for them. There are several approaches that can be of help, and sometimes a combination of them all is needed. * Do your job to the best of your ability. * Child centred planning – plan for the need of each child in the class, not for the class as a whole. * Acceleration – possibly moving the gifted child into an older class for some/all subjects. The child will be doing the work of an older class and it will be more challenging. * Differentiation – keep the gifted child with their age group but provide different material for the gifted learner to do.

Physician Assisted Suicide The Canadian Euthanasia Debate

Physician Assisted Suicide: The Canadian Euthanasia Debate Imagine laying in bed; your eyes are open and you cannot move. Your brain is working but cannot tell your body how to function. We as a society have a right and a moral obligation to legalize physician-assisted suicide. The legalizing euthanasia grants terminally ill patients; the right to die without withdrawing from life support. Also giving the right for patients to die on their own terms. Euthanasia is a publically supposed issue that needs to be changed and allowed into hospitals. People may believe that assisted suicide by a physician is wrong and unmorally just but they must understand that Criminal Code 241 must be changed. Criminal code 241 (b) states a person who aids or abets a person to commit suicide, whether suicide ensues or not, is guilty of an indictable offence and liable to imprisonment for a term not exceeding fourteen years. So why is it okay for hospitals to allow patients dying to go off life supports? Each year thousands of people die from terminal illness in Canada. Going through an unimaginable amount of pain and suffering. Having their loved ones watching the harshness of their death. Giving one the right to die gives them a chance of dignity. It gives one a chance to celebrate their life they had lived and allow themselves to move on. Physicians take great pains to alleviate suffering but when someone is so ill that they and their physician believe they should die; this is when aShow MoreRelatedCritical Reflection : The Euthanasia Debate1652 Words   |  7 PagesReflection: The Euthanasia Debate Medical advancements and improved living conditions worldwide have increased the life span of our population (U.S. Department of State, 2015). As a result, many individuals are now living with degenerative or chronic ailments that require increased support (Vissers et al., 2013). Unfortunately, these illnesses often come with a â€Å"diminished quality of life† (Butler, Tiedemann, Nicol, Valiquet, 2013). These issues have brought forth the euthanasia debate, which posesRead MoreEuthanasia - Assisted Suicide And Euthanasia843 Words   |  4 PagesAccording to the Health Law Institute at Dalhousie University, assisted suicide is â€Å"the act of intentionally killing oneself with the assistance of another who provides the knowledge, means or both.† Euthanasia is a â€Å"deliberate act undertaken by one person with the intention of ending the life of another person to relieve that person’s suffering where the act is the cause of death (Health Law). As of June 17, 2016, both assisted suicide and euthanasia are legal in Canada as long as the established criteriaRead MoreEuthanasia in Canada646 Words   |  3 Pagesdiscussing the topic of Euthanasia also known as â€Å"assisted suicide.† The word originated from the Greeks, meaning â€Å"good death†. Euthanasia refers to the ending of one’s life, primarily to end suffering and pain. Euthanasia is a controversial topic and generates many political and religious debates. Although euthanasia is illegal in Canada, in some jurisdictions such as the Netherlands, Belgium, Switzerland and the American states of Washington, Oregon and Montana, euthanasia is a legal and common practiceRead MoreLegalizing Euthanasia in Canada837 Words   |  3 Pagessomeone to commit suicide whether or not suicide ensures , is guilty of an indictable offence and liable to imprisonment for a term not exceeding 14 years.† 1 It is this law which violates the human right to life as well as create s a widely spread controversy over whether or not euthanasia should become legalized in Canada. 2 Legalizing euthanasia would create many benefits for those who suffer from a terminal illness, giving them freedom and control over their own lives. Euthanasia should be legalizedRead MoreThe Ethical Dilemmas Of Euthanasia Essay1638 Words   |  7 PagesThe Ethical Dilemmas of Euthanasia in Canada with the Legalization of Physician-Assisted Suicide This systematic analysis of the professional literature will explore the ethical dilemmas that Canadian medical professionals face while considering euthanasia or physician-assisted suicide, the latter of which was made legal in Canada on June 17, 2016 (Chochinov and Frazee, 2016). This paper will discusses the conflicts that healthcare professionals are faced with when looking at the quality of lifeRead MoreArgument Analysis: Euthanasia and the Right to Die Essay1035 Words   |  5 PagesThe right to die and euthanasia, also known as physician-assisted suicide, have long been topics of passionate debate. Euthanasia is simply mercy killing while the phrase â€Å"physician-assisted suicide† regards the administering or the provision of lethal means to aid in the ending of a person’s life. The right to die entails the belief that if humans have the governmental and natural right to live and to prolong their lives then they should also have the right to end their life whenever desired.Read More Euthanasia Essay1459 Words   |  6 PagesWhen a person commits an act of euthanasia, he/she brings about the death of another person because he/she believes that the latter’s present existence is so bad that he/she would be better off dead. The word euthanasia originated from the Greek language: eu means â€Å"good† and thanatos means â€Å"death†. The meaning of euthanasia is â€Å"the intentional termination of life by another at the explicit request of the person who dies† (Religious Tolerance). However, euthanasia has many different meanings, whichRead MoreEuthanasia And Physician Assisted Suicide997 Words   |  4 PagesEuthanasia and Physician Assisted Suicide: The Right to Die with Dignity (The Legalization, At Risk Groups, and Rebuttal) The possible legalization of voluntary euthanasia and physician assisted suicide brings concerns in regards to how well it will be accepted. There are contradictions that exists between government and church when it comes to the morals and values placed on human life. Although, society has concerns in regards to at risk community groups and the type of treatment availableRead MoreThe Principle Of Respect For Patient Autonomy Essay2130 Words   |  9 Pagesrequest a hastened death. In a study investigating physician attitudes and behaviors when utilizing end-of-life decisions that hastened death, researchers found physicians who would submit to a patient’s request for an assisted death stated that respect for the patient’s autonomy was important in their decision-making (Fried, Stein, O’Sullivan, Brock, Novack, 1993). Physicians who would not comply with a patient’s request for an assisted death agreed that respect for autonomy was significantRead MorePhilosophy And Death : An Argument For Physician Assisted Suicide1172 Words   |  5 Pages PHILOSOPHY AND DEATH: AN ARGUMENT FOR PHYSICIAN ASSISTED SUICIDE EMILY BEDFORD 10107525 Submitted to: Robert Armstrong PHIL 259 Monday, December 7, 2015 Introduction As humans, we have the right to life. In Canada, in section 7 of our Charter of Rights and Freedoms, Canadians can expect â€Å"life, liberty and security of the person.† This means not only to simply exist, but have a minimum quality and value in each of our lives. Dying is the last important, intimate, and personal moment