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Derivatives

Discussion in 'SA2' started by Viki2010, Sep 18, 2017.

  1. Viki2010

    Viki2010 Member

    Hi, I'm looking for a good example of how an application of derivative would lead to reduction of capital requirements.
     
    Viki2010, Sep 18, 2017
    #1
  2. Mark Willder

    Mark Willder ActEd Tutor Staff Member

    We might be holding capital against the risk of a fall in equity values making the guarantees bite on with-profits business. By holding a put option we can reduce this risk and hold less capital.

    Best wishes

    Mark
     
    Mark Willder, Sep 18, 2017
    #2
    FloWesh and Viki2010 like this.

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