From wheat futures to credit derivatives to CDS's and CDO's, derivative and structured credit products have boomed. Embedded leverage can be enormous, and does not appear on banks' balance sheets. However, financial instrument innovation provides growth and profit. What are the major pros and cons of increasing levels of financial instrument innovation?© BrainMass Inc. brainmass.com October 10, 2019, 5:45 am ad1c9bdddf
The main benefit of increasing levels of financial instrument innovation include increasing flexibility and options for financial managers to manage their financial strategies, be it related to working capital decisions, capital budgeting decisions, fund raising decisions or other financial management areas. The increasing use of derivatives, structured products, etc. in ...
This solution discusses major pros and cons of increasing levels of financial instrument innovation.