The credit crisis reflects the collapse of a tower of structured finance products based on subprime mortgage loans. These instruments-RMBSs, CDOs, SIVs, and CDSs-shifted the risk of mortgage lending, especially the default risk, from one party to another, until many lost sight of the real risks...

Enhanced active equity strategies, including 120-20 and 130-30 long-short portfolios, have become increasingly popular as managers and investors search for new ways to expand the alpha opportunities available from active management. But these strategies are not always well understood by the...

Investors who buy ldquo;insurancerdquo; against a decline in stocks, bonds, or other financial markets are shifting that risk onto the financial institutions providing such ldquo;insurance.rdquo; These insurance providers frequently control their exposure to this risk by purchasing options or by...

Optimization of long-short portfolios through the use of fast algorithms takes advantage of models of covariance to simplify the equations that determine optimality. Fast algorithms exist for widely applied factor and scenario analysis for long-only portfolios. To allow their use in factor and...