Employee stock options (ESOs) are used by many corporations as a major part of their compensation programs. Expensing issued ESOs on the grant date is now mandated in FAS 123 (R). The SEC's specific measurement objective for disclosure is to estimate an ESO grant's expense to the granting...

The purpose of this paper is to address two issues. It defines the appropriate role played by institutions in the financial sector and focuses on the role of risk management in firms that use their own balance sheets to provide financial products. A key objective is to explain when risks are...

Corporate debt indentures are complex contracts that include a variety of restrictions and options. On one side, an issuing corporation can engineer game-based transactions to escape covenant restrictions or capture option value for its stockholders. On the other side, bondholders can form...

This paper distinguishes between securitization, in which simple pass-through instruments are created, and structuring, in which mortgage derivative claims are created. The point is to explain how structuring a transaction brings value to a deal's underwriter. Briefly, an underwriter must defeat...

Structured finance entails collateral-backed securitization of portfolios of financial instruments. The instruments used as collateral can range from prosaic products like automobile loans and first mortgages to unusual products like time share loans and delinquent consumer loans. The economic...