With stock markets crashing and yesterday’s kings becoming regents, there have been talks as to why their ex-queens should not bear the same fate. In a recent article written by Matthew Lynn (Bloomberg), he points out how such wives enjoy their holidays in tax havens when their former better halves are down in drains.
The answer for this: Divorce Derivative. So how will this work?
The value of the contract will be linked to the prevailing economic condition of the counterparties. So if the markets are booming or any one of the investments that the husband made started paying dividends after the divorce, the price goes up. And thanks to Mark-to-market rules this can be settled daily. On the other hand let’s say the wife gets a new khazana (like marrying a an oil baron) she would have to pay the husband a determined sum. How the instruments will be priced and how they will be sold is left to the intellectual capabilities of us Financiers. But till then don’t cheat on your husband or wife.
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2 comments:
Good one. But is breaking marriages a work of financiers or is it Destiny that the fate changes at the stock market after the divorce?
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