Thesis (MBA)--Stellenbosch University, 2002. / ENGLISH ABSTRACT: Increased uncertainty in global markets has compelled modern investment
and portfolio management to tailor specific financial outcomes. Investors
can incorporate derivative instruments into their portfolios to hedge their
positions against uncertainty, obtain exposure to virtually any risk or obtain
current exposure for future income. Warrants are such instruments; it
tracks its underlying asset as options and are tailored for smaller and
private investors. It could, however, also be dangerous to one's financial
health if the finer intricacies are not understood.
Warrants take the investment industry to a new level, because it is
essentially a retail product. Warrant issuers hedge a position in assets or
on derivative exchanges at a 'wholesale' price and then short the position
in small contracts on the stock exchange at a 'retail' price. The price
difference presents itself in the volatility parameter used to calculate the
issuing price of the warrant. Once issued, the issuer maintains influence
on the price by exerting either supply or demand through maintaining a bid
and offer in the market. Often, issuers use this 'market-making' to steer
the instrument price towards a lower volatility parameter at the expiry of
the warrant when it is neutralised, thus securing profit to the issuer.
Traditionally financial institutions would market their services in managing
assets. They now flex muscles in marketing a retail product through
issuing warrants as well. Fierce competition exists among issuers with low
cost and differentiated strategies identifiable. These strategies could
persuade an investor towards a particular warrant, which might not
necessarily be the best investment from the investor's viewpoint. This
erodes the efficiency of the market. / AFRIKAANSE OPSOMMING: Toenemende onsekerheid op wêreldmarkte noodsaak hedendaagse
beleggingsbestuur om spesifieke finansiele resultate te verseker.
Beleggers kan afgeleide instrumente in portefeuljes gebruik om teen
onsekerheid te verskans of blootstelling te verkry. Sekuriteitsregte is 'n
populêre instrument vir private beleggers. Dit word uitgereik deur
finansiele instellings en volg die pad van 'n onderliggende bate, soos 'n
opsie. Vanweë die intrede van 'n middelman, hou hierdie instrumente
egter addisionele risiko in.
Sekuriteitsregte kan beskryf word as 'n kleinhandelsproduk.
Kontrakskrywers neem lang posisies in bates of op die afgeleide beurs in,
teen groothandel pryse en verkans kort posisies in klein kontrakte op die
sekuriteitsbeurs om sodoende 'n neutrale posisie te handhaaf. Die
prysverskil manifisteer as 'n volatiliteits maatstaf van die onderliggende
bate. Na uitreiking beïnvloed die onderskrywers die prys deur die vraag en
aanbod op die mark te manipileer. Hierdie invloed kan gebruik word om
die kontrakprys na 'n laer volatiliteitsvlak te stuur voor die kontrak verstryk,
sodat addisionele wins gewin kan word.
Finansiële instellings bemark hul dienste tradisioneel as batebestuurders.
Hul besigheid word egter nou uitgebrei deur handelsprodukte ook te
bemark. Sterk kompetisie bestaan tussen onderskrywers met lae koste of
gedifferensieerde strategieë identifiseerbaar. Beleggers se keuses word
dikwels deur hierdie strategiese bemarking beïnvloed, eerder as om op
finansiele toepaslikheid te fokus. Dit lei tot die gevolgtrekking dat die mark
nie volkome voltreffend is nie.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/52883 |
| Date | 12 1900 |
| Creators | Koorts, Thorpe Thomas |
| Contributors | Van der M Smit, E., Stellenbosch University. Faculty of Economic & Management Sciences. Graduate School of Business. |
| Publisher | Stellenbosch : Stellenbosch University |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | English |
| Type | Thesis |
| Format | 24 p. : ill. |
| Rights | Stellenbosch University |
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