The overuse of financial contracts known as derivatives – which were designed to help companies hedge against risk – was widely blamed for triggering the economic crisis of 2008. None other than Warren Buffet has attacked derivatives as “time bombs – both for the parties that deal in them and the economic system.”
But now, for the first time, researchers have found that hedging can increase firm value. (more…)
TORONTO, ON – Brokers are supposed to recommend investments that are in the best interests of their clients.
But a study published in the February 2013 issue of the Journal of Finance has found that mutual funds offering higher broker fees attract the most investments, especially when the broker is not affiliated with the mutual fund company. Every additional dollar paid to a broker corresponds with another six dollars invested into the fund, and another fourteen dollars if the broker is an unaffiliated third party whose compensation depends exclusively on sales commissions. (more…)
