Assignment 3

Assignment 3 - business are their difficulty to get out of,...

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In his article, Warren Buffet describes derivatives as ticking time bombs because of the risks involved in them. A derivative is a financial security whose value is “derived” in part from the value and characteristics of another security, the underlying asset. A few of the risks he lists in this
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Unformatted text preview: business are their difficulty to get out of, their sometimes extremely overstated earnings, and their requirement for collateral if a company has a credit downgrade. Buffet believes derivatives are very dangerous and so far there are no effective ways for banks or governments to control them....
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This note was uploaded on 03/26/2008 for the course FINC 421 taught by Professor Viale during the Fall '07 term at Texas A&M.

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