Other Papers and Articles

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Other Papers and Articles

A Private Solution to a Public Problem: A Response from the Private Sector to the College Saving Crisis

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John D. Finnerty, in Tax Incentives for Education. United States Senate Committee on Finance, Washington, D.C., pp. 194-204. 1988 March 15

How to Cope with Rising College Costs

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John D. Finnerty, Tax Management Financial Planning Journal, pp. 224-228. 1988 May 31

Measuring the Risk Premium on the Market Portfolio

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John D. Finnerty, in Frank J. Fabozzi, ed., The Institutional Investor Focus on Investment Management. Ballinger, Cambridge, MA, pp. 161-167. 1989

Measuring the Duration of Floating-Rate Debt Instruments

Although the concept of duration was developed over 50 years ago, only recently have attempts been made to calculate the duration of a floating-rate debt instrument. Morgan (1986) developed a formula for the duration of a floating-rate bond within a continuous time framework and, together with Chance (1986), adapted the model to a discrete time framework. The usefulness of this model is limited because it is tied to a specific example. The Chance-Morgan procedure is used to develop a computational formula within a discrete time framework that incorporates the sensitivity of the coupon rate index into changes in market interest rates. The formula assumes a flat term structure, but it can be extended to account for different shapes of and movements in the term structure.

John D. Finnerty, in Frank J. Fabozzi, ed., Advances & Innovations in the Bond and Mortgage Markets. Probus, Chicago, pp. 77-96. 1989

Financial Engineering

Financial engineering allows the creation of innovative financial instruments and processes and the formulation of creative solutions to complex financial problems. A new security is innovative only if it: 1. enables an investor to realize a higher aftertax-risk-adjusted rate of return without adversely affecting the issuer's aftertax cost of funds, and/or 2. lets an issuer realize a lower aftertax cost of funds without adversely affecting investors. The basic causal factors reflected in innovative financial processes are: 1. efforts to reduce transaction costs, 2. steps to reduce idle cash balances in response to higher interest rates, and 3. the availability of relatively inexpensive computer technology that facilitates quicker financial transactions. Creative solutions to corporate finance problems have concentrated on developing the most efficient strategy for calling high-coupon debt when interest rates decline.

John D. Finnerty, in the New Palgrave Dictionary of Money and Finance, vol. 2. Macmillan, London, pp. 56-63. 1992

Make Securities Innovation Work to Your Advantage

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John D. Finnerty and Herbert S. Adler, Butterworths Journal of International Banking and Financial Law, pp. 64-67. 1992 February

Structures and Contracts which Reallocate Risk

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John D. Finnerty, in proceedings of the conference on Structured Finance: Design, Engineering & Production. Euromoney, Brussels, pp. 75-96. 1992 June 4-5

An Overview of Corporate Securities Innovation

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John D. Finnerty, Journal of Applied Corporate Finance, pp. 23-39. Reprinted in Donald H. Chew, Jr., ed., The New Corporate Finance: Where Theory Meets Practice. McGraw-Hill, New York, 1993, pp. 212-228, and in Raymond H. Rupert, ed., The New Era of Investment Banking. Probus, Chicago, 1993, ch. 16. 1992 Winter

Sources of Value Added from Structuring Asset-Backed Securities to Reduce or Reallocate Risk

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John D. Finnerty, in Charles Stone, Anne Zissu, and Jess Lederman, eds., The Global Asset Backed Securities Market. Probus, Chicago, ch. 3. 1993

Designing Securities to Qualify as Capital for Bank Regulatory Purposes

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John D. Finnerty, Burton L. Raimi, and Neil R. Crowley, in Charles A . Stone and Anne Zissu, eds., Global Risk Based Capital Regulations: Management and Funding Strategies. Irwin Professional Publishing, Burr Ridge, IL, ch. 8. 1994