The Risk Management of Minimum Return Guarantees

Contracts paying a guaranteed minimum rate of return and a fraction of a positive excess rate, which is specified relative to a benchmark portfolio, are closely related to unit-linked life-insurance products and can be considered as alternatives to direct investment in the underlying benchmark. They contain an embedded power option, and the key issue is the tractable and realistic hedging of this option, in order to rigorously justify valuation by arbitrage arguments and prevent the guarantees from becoming uncontrollable liabilities to the issuer. We show how to determine the contract parameters conservatively and implement robust risk-management strategies.

The Road to Negative Behavior: Discriminatory Intentions in the German Population

This study analyzes discriminatory intentions shared by members of the German majority against several outgroups in Germany. Patterns of discriminatory intentions against various minority groups were investigated for several indicators, including gender, age, and political orientation, by means of a representative survey (N = 1,778). The relationship between prejudices and discriminatory intentions against different target groups was also analyzed. Prejudice and discriminatory intentions show moderate but consistently positive correlations in relation to one and the same target group. Moreover, it was found that discriminatory intentions against one outgroup are related to hostile attitudes towards other outgroups, too. The results support the hypothesis of a syndrome of group-focused enmity.