Article
A Risk- and Complexity- Rating Framework for Investment Products
Financial Analysts Journal
Publication Type
Journal Article
Publication Date
11-2015
Abstract
Many investors who bought such investments as Lehman Brothers’ minibonds did not understand the products’ complicated features. This fact suggests that if the inherent risk and complexity of products’ structure are not clearly understood by investors, they will be unable to make informed decisions. Some practitioners have recently attempted to calibrate product complexity. The authors propose a framework for classifying investment product risk and complexity separately with a list of factors that contribute to these attributes. They demonstrate the framework’s simplicity and usefulness in helping investors make informed decisions, showing that it can be used to calibrate a variety of investment products.
Discipline
Identifier
10.2469/faj.v71.n6.2
Publisher
Chartered Financial Analysts Institute
Additional URL
https://doi.org/10.2469/faj.v71.n6.2
Citation Information
Seng Kee Benedict KOH, Cher Chiew Francis KOH, LEE, David Kuo Chuen, Kian Guan LIM, et al.. "A Risk- and Complexity- Rating Framework for Investment Products" Financial Analysts Journal Vol. 71 Iss. 6 (2015) p. 10 - 28 ISSN: 0015-198X Available at: http://works.bepress.com/kianguan-lim/13/