The historical cost principle and the fair value concept: The basic measures of the value of synthetic financial instruments
Journal Title: Zeszyty Naukowe Małopolskiej Wyższej Szkoły Ekonomicznej w Tarnowie - Year 2015, Vol 28, Issue 4
Abstract
The contemporary global financial market is characterized by the fact that most financial instruments can be replicated. The replication procedures involve the construction of a new financial instrument through combining other financial instruments, so that the effect of the combination is identical to the properties of the existing instrument. New financial instruments, referred to as synthetic instruments, are constructed on the basis of both primary and derivative instruments. A synthetic instrument is a financial structure based on an appropriate combination of primary and derivative instruments—their substitutes. It provides the possibility of constructing any type of a financial instrument. The paper presents a concept for designing synthetic instruments on the basis of the call/ put parity. The call/ put parity can be a basis for designing a synthetic share, a call option and a put option, and a risk-free investment. The concepts were used to develop two strategies (strangle and straddle) based on synthetic instruments. The balance sheet valuation of strangle and straddle spread strategies was based on a mixed valuation model, making use of two basic measures of valuation—historical costs and fair value.
Authors and Affiliations
Paweł Bielawski
Keywords
Related Articles
- EP ID EP95899
- DOI -
- Views 89
- Downloads 0
Organizational culture oriented for innovation: Influencing variables
In order to lead employees to collectively innovate and thereby achieve business entrepreneurship, managers should project cultural values and implement them through appropriate human resource practices that affect the p...
Working time essence and models
Time, in its different areas and dimensions has played an important role in production systems of an organisation, including in particular economic entities active on the market. Properly construed and correctly adjusted...
Ergonomic aspects and arduousness of work as a traditional warehouseman and the warehouseman supported by voice system: Comparative analysis
The article presents the ergonomic aspects of work storekeeper and warehouseman traditional voice-assisted system. The assessment of energy expenditure was developed while performing different activities related to work,...
Boutique hotels as a new trend in hotel industry based on the example of the Lower Silesian Voivodship
Accommodation base is one of the most important determinants of tourism development. Its quality has a significant impact on the level of tourist services in a given country. Hospitality is one of the most interesting se...
Physical characteristics of work in the perspective of employees and employers
The aim of this article is to show the differences in the perception of the physical characteristics of the criteria by employers and employees, as well as the identification of areas and scope of these differences for t...