Derivatives

Article Abstract:

Derivatives are financial instruments whose returns are connected to the price of some other asset. They can offer investors unusually large returns but their complexity can also lead to financial ruin, as the bankruptcy of Orange County, CA, and the closure of Tex-Pool recently showed. State legislators are currently working on laws which aim to limit the use of derivatives. However, some experts disagree with such a drastic view. They contend that the much-maligned derivatives can actually be a very useful tool for fund managers.

Regulation, Licensing, and Inspection of Miscellaneous Commercial Sectors, Securities Regulation-State, Usage, Economic policy, Derivatives (Financial instruments), Securities law, State government

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Having too much stock can cause problems

Article Abstract:

Wal-Mart Stores' stock plunged from $34 in Feb. 1993 to a mid-$20s range in 1994. The drop affected the morale of around 360,000 employees who have joined a profit-sharing plan that held 82% of fund holdings in the chain's stock. Thus, plan sponsors have to integrate a control system for profit-sharing ventures and similar employee contribution plans. Most firms use their stock to match benefit plans because they offer tax advantages and motivate employees in work performance.

Pension Funds & Benefit Plans, Pension Funds, Stock Ownership Plans, Management, Evaluation, Employee benefits, Employee stock options, Employee stock ownership plans

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Should you seek outside management?

Article Abstract:

Companies are increasingly relying on outside personnel for their investment management needs. These companies believe that the extra expense is justified because it allows them to focus on core operations and to retain only minimum number of staff. Meanwhile, other companies with their own internal plan management departments have taken advantage of this trend by hiring out their services.

Services, Investment advisers

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