mitworld.mit.edu - 4/14/2009
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There will be a time “beyond crisis,” asserts Robert C. Merton , who delves into the dense science of derivatives -- a field he has fundamentally shaped -- to explain how the vast global economic collapse has come about, and how financial innovations at the heart of the collapse could also ...
blogs.ft.com - 4/13/2009
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blogs.ft.com —
Useless finance A derivative is a contingent claim
whose payoff depends on the performance of some other...
financial instrument or security. For instance, an American equity call option gives the purchaser of the call the right (but not the ...
(more)
Useless finance, harmful finance and useful finance
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Merton on the Financial Crisis
EconLog: Library of Economics and Liberty —
A great lecture . Found by Steven Hsu . Pointer from the indispensable Mark Thoma . I enjoyed his comments on asset valuation. He wonders whether the issue is that the assets cannot be valued or that key players (bankers, regulators) don't want them to be valued. He takes what I call the "geek" side of the suits vs. geeks debate. His view is that the assets are not necessarily undervalued. He emphasizes the nonlinearity, put option nature of the assets. Another key point is that it does not take complex derivatives to create embedded options. Many ordinary ...
Lecture from Robert Merton
Greg Mankiw's Blog —
At MIT. Thanks to Arnold Kling for the pointer.
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