A perspective on credit derivatives

This contribution offers an explanation of credit derivatives as a group of financial instruments having a common purpose being the managing of credit exposures, and thus credit or default risk. This paper explores the links between their economic and financial manifestations and the legal bases for their widespread application. To ensure an understanding of the purposes served by each of the main types of credit derivatives, a detailed scrutiny of individual instruments is undertaken. Issues relating law and economics to trading in this type of derivative are investigated, then pricing issues and empirical evidence are considered. A summary brings together the range of features bearing upon the effective development of a market in these financial instruments.

Can the use of foreign currency derivatives explain variations in foreign exchange exposure? Evidence from Australian companies

We investigate the role of foreign currency derivatives (FCD) in alleviating foreign exchange rate exposure of Australian firms. While there is some evidence that the use of FCD reduces the level of ex-post short-term exposure, such an effect is absent with regard to the degree of foreign operations. Our results support the view that FCDs are used to hedge existing exchange rate exposures and that Australian firms, generally, are extensively exposed to currency fluctuations in the long run. While monthly exposure appears to be a function of a firm's size and financial hedging, exchange rate exposure of shorter horizons (1 and 3 months) appears to be negatively related to a firm's price earnings ratio (proxying growth opportunities)—thereby supporting the ‘underinvestment’ hypothesis. Further, the exposure of longer horizons (12 and 24 months) is positively related to a firm's liquidity, supporting the view that liquidity is a substitute for hedging.

Further evidence on the corporate use of derivatives in Australia : the case of foreign currency and interest rate instruments

In a recent issue of this journal Nguyen and Faff (2002) reported on an empirical exploration of the motives behind the aggregate use of financial derivatives by Australian companies. Employing the same sample of firms, the current paper extends their analysis to investigate similar issues, this time focussing separately on foreign currency and interest rate derivatives. At a specific level, our results reveal the following. A firm is more likely to use foreign currency derivatives if it is large and has more debt in its capital structure. Interest rate derivatives, on the other hand, are more likely to be used if a firm is larger, more levered, more liquid and pays higher dividends. These results are consistent with existing hedging theories. Market to book value (proxying growth opportunities), however, portrays an inconsistent relationship with the likelihood of interest rate derivative usage. When it comes to the extent of usage, a firm uses foreign currency derivatives more extensively if it is smaller, pays higher dividends and has more debt. Similarly, interest rate derivatives are used more extensively to address a high level of debt and a high dividend payout policy. At a general level, the current study confirms the core finding of Nguyen and Faff (2002), namely, that Australian companies use derivatives with a view to value maximisation.

Exchange rate exposure, foreign currency derivatives and the introduction of the euro: French evidence

We investigate the impact of the introduction of the Euro on exchange rate exposures for French corporations and examine the corporate use of foreign currency derivatives to hedge exchange rate exposure post-Euro. Our findings indicate that the introduction of the Euro is associated with both a reduction in the number of firms that have significant exchange rate exposure and the absolute size of exposure. Consistent with these reduced exposures, French firms use foreign currency derivatives less intensively. Furthermore, the use of foreign currency derivatives is found to be associated with lower exchange rate exposure but there is insufficient evidence that these instruments are more effective in the post-Euro environment.

1-Naphthyl- and mesityltellurium(IV,II) derivatives of small bite chelating organic ligands: effect of steric bulk and intramolecular secondary bonding interaction on molecular geometry and supramolecular association

The synthesis and characterization of unsymmetric diorganotellurium compounds containing a sterically demanding I-naphthyl or
mesitylligand and a small bite chelating organic ligand capable of 1,4-Te···N(O) intramolecular interaction is described. The reaction
of ArTeCl₃ (Ar = I-C_lOH₇, Np; 2,4,6-Me₃C₆H_2' Mes) with (SB)HgCI [SB = the Schiff base, 2-(4,4'-N0₂C₆H₄CH=NC₆H₃-Me)] or a methyl ketone (RCOCH₃) afforded the corresponding dichlorides (SB)ArTeCI₂ (Ar = Np, 1Aa; Mes, 1Ba) or (RCOCH₂)ArTeCl₂ (Ar = Np; R = Ph (2Aa), Me (3Aa), Np (4Aa); Ar = Mes, R = Ph (2Ba)). Reduction of 1Aa and 1Ba by Na₂S₂0₅ readily gave the tellurides (SB)ArTe (Ar = Np (1A), Mes, (1B) but that of dichlorides derived from methylketones was complicated due to partial decomposition to tellurium powder and diarylditelluride (Ar₂Te₂), resulting in poor yields of the corresponding tellurides 2A, 2B and 3A. Oxidation of the isolated tellurides with S0₂Cl₂, Br₂ and I₂ yielded the corresponding dihalides. All the synthesized compounds have been characterized with the help of IR, ¹H, ^l3C, and ¹²⁵Te NMR and in the case of 2Aa, and 2Ba by X-ray crystallography. Appearance of only one ¹²⁵Te signal indicated that the unsymmetric derivatives were stable to disproportionation to symmetric species. Intramolecular 1,4-Te· . ·0 secondary bonding interactions (SBIs) are exhibited in the crystal structures of both the tellurium(IV) dichlorides, 2Aa, and 2Ba. Steric repulsion of the mesityl group in the latter dominates over lone pair-bond pair repulsion, resulting in significant widening of the equatorial C-Te-C angle. This appears to be responsible for the lack of Te· . ·CI involved supramolecular associations in the crystal structure of 2Ba.

Antioxidant activity of β-lactoglobulin and its modified derivatives

Both native ss-lactoglobulin and its modified derivatives (Figure 1) exhibited antioxidant activity when assessed by the FRAP assay (which measures total reducing power of the sample). A positive correlation was observed between antioxidant activity and protein concentration in all samples. Compared to the native protein, the concentration dependence of the antioxidant activity was significantly greater when ss-lactoglobulin was modified with the Maillard reaction (p=0.000) and Enzyme hydrolysis (p=0.022)....

Fractional polynomials and model selection in generalized estimating equations analysis, with an application to a longitudinal epidemiologic study in Australia

In epidemiologic studies, researchers often need to establish a nonlinear exposure-response relation between a continuous risk factor and a health outcome. Furthermore, periodic interviews are often conducted to take repeated measurements from an individual. The authors proposed to use fractional polynomial models to jointly analyze the effects of 2 continuous risk factors on a health outcome. This method was applied to an analysis of the effects of age and cumulative fluoride exposure on forced vital capacity in a longitudinal study of lung function carried out among aluminum workers in Australia (1995-2003). Generalized estimating equations and the quasi-likelihood under the independence model criterion were used. The authors found that the second-degree fractional polynomial models for age and fluoride fitted the data best. The best model for age was robust across different models for fluoride, and the best model for fluoride was also robust. No evidence was found to suggest that the effects of smoking and cumulative fluoride exposure on change in forced vital capacity over time were significant. The trend 1 model, which included the unexposed persons in the analysis of trend in forced vital capacity over tertiles of fluoride exposure, did not fit the data well, and caution should be exercised when this method is used.

Acylmethyl(aryl)tellurium(IV,II) derivatives : intramolecular secondary bonding and steric rigidity

Electrophilic substitution of acylmethanes (methyl ketones), RCOCH3 (R = i-Pr, 1; Et, 2; Me, 3) with aryltellurium trichlorides, ArTeCl3 (Ar = 1-C10H7, Np, A; 2,4,6-Me3C6H2, Mes, B; 4-MeOC6H4, Anisyl, C) under mild conditions affords the corresponding acylmethyl(aryl)tellurium dichlorides (RCOCH2)ArTeCl2. Reduction of the dichlorides, gives tellurides, (i-PrCOCH2)ArTe, 1A–1C, which give the corresponding dihalides, (i-PrCOCH2)ArTeX2 (X = Cl, 1Aa–1Ca; Br, 1Ab–1Cb; I, 1Ac–1Cc) when reacted in situ with SO2Cl2, Br2 or I2. The unsymmetric tellurides are labile towards disproportionation and attempts to obtain them lead to the isolation of Ar2Te2 except in the case of (i-PrCOCH2)MesTe ( 1B), which represents an interesting example of a kinetically stable aryl(alkyl)telluride. All the dihalomesityltellurium(IV) derivatives show separate 1H and 13C NMR signals for the ortho methyls irrespective of the sizes of R and X ligands. The telluride, 1B with free rotation about Te–C(mesityl) bond shows, like the unsymmetric diorganotellurium(IV) dihalides, only one 125Te NMR signal. The 1,4-chelating behavior of the acyl ligand among diorganotellurium(IV) compounds is inferred from the X-ray diffraction data for 1Aa, 1Ac, 1Ba, 1Bb, 1Ca and 1Cc which are indicative of the presence of intramolecular TeO secondary bonding interactions (SBIs) at least in the solid state. As a consequence, steric repulsion in case of the mesityltellurium(IV) derivatives, 1Ba and 1Bb, reaches the threshold so as to cause loss of two-fold rotational symmetry of the mesityl group about the Te–C(mesityl) bond axis. Intermolecular C–HO H-bonding interactions appears to stabilize such an orientation of the aryl ligand at least in the solid state.

Review of John D. Caputo : On religion, London and New York : Routledge, 2001, paperback 0-415-23332-1, 147 pages lncluding lndex

This is a review of John Caputo’s recent Routledge book on religion. Caputo’s central idea is captured by the phrase ‘religion without religion’, by which he means a religious stance or attitude that is not circumscribed by allegiance to any specific creed.

Fatty acid-benzendiol derivatives and methods of making and using thereof

Disclosed are compounds comprising a benzenediol derivative bound to one or more fatty acids. Also disclosed are nutritional supplements, pharmaceutical formulations, delivery devices, and foodstuffs comprising the disclosed compounds. Methods of using the disclosed compounds and compositions to improve health are also disclosed.

Evaluation of novel hyphodermin derivatives as glycogen phosphorylase a inhibitors

The lipophilicity, permeability, solubility, polar surface area and ‘rule-of-five’ properties were assessed, using QikProp v2.5 (Schrödinger, Inc.) and ALOGPS 2.1 calculations, for 25 Hyphodermin derivatives. These compounds obeyed the ‘rule-of-five’, and the calculated physicochemical values were generally within desired limits. All compounds were tested against Glycogen Phosphorylase a (GPa). Four phenyl and benzyl substituted 2-oxo-hexahydro and tetrahydrobenzo[cd]indole carboxylic acids were identified as novel inhibitors of GPa with estimated IC50 values in the range 0.8–1.3 mM. Molecular modelling of these novel inhibitors was used to obtain the main structural features of this class of molecule for future structure–activity relationship studies.

Are firms hedging or speculating? The relationship between financial derivatives and firm risk

The focus of this article is an investigation of the relationship between the use of financial derivatives and firm risk using a sample of Australian firms. Our results suggest that this relationship is nonlinear in nature. Specifically, the use of financial derivatives is associated with a risk reduction for moderate derivative users. Derivative usage among extensive derivative users, on the other hand, appears to lead to an increase in firm risk. Nevertheless, compared to firms that do not make use of derivatives, there is no evidence that extensive derivative users are exposed to a risk level in excess of that of nonderivative users. The results are, therefore, indicative of a hedging motive behind the use of financial derivatives.