- General post (802)
- April 3, 2008: Armchair Economist gets a much-needed update
- April 3, 2008: Ghost of Herbert Hoover
- April 3, 2008: Are you smarter than a high-schooler?
- April 3, 2008: Katrina hero: Wal-Mart
- April 2, 2008: No Child Left Behind
- April 2, 2008: The poverty hype
- April 2, 2008: Oil profits
- April 2, 2008: Don's response
- April 2, 2008: Oil refinements
- April 1, 2008: My profile
Equity swaps and equity investing
The following document helped me understand equity swaps better. It’s now been five years since I worked in the finance field, so I’m a little rusty in areas. Plus, the financial innovations are getting more rapid and more complex. Pricing some of these newer instruments is more than a little difficult. This PDF on equity swaps begins:
In an equity swap, two parties make a series of payments to each other with at least one set of payments determined by a stock or index return. The other set of payments can be a fixed or floating rate or the return on another stock or index. Equity swaps are used to substitute for a direct transaction in stock. This article explores equity swaps, describing variations, applications, and advantages and disadvantages. It also presents and illustrates formulas for pricing and valuation and provides empirical evidence comparing the performance of equity swaps against comparable strategies involving direct investment in equity.