Includes bibliographical references and index.

Challenges of Liabilities Management -- Market Bubble of Telecoms Stocks -- Leveraging Makes the Global Financial Market Fragile -- Credit Crunch Cripples Ambitions of Telephone Operators -- Investment Banks Also Paid Dearly for Telephone Companies' Overexposure -- Message from the Bubble in the Fall of 2000 -- Liquidity Crisis to Be Solved through Liability Management -- Downfall of Lucent Technologies, Xerox, and Dot-Coms -- Has the New Economy Been Destabilized? -- Market Falls Out of Favor with Tech Stocks: Apple Computer's Blues and the Dot-Coms -- Lucent Technologies' Hangover -- Downfall of Xerox -- Shift from Real to Virtual Economy and the Challenge of the Service Industry -- Financial Staying Power and Business Turf -- Liabilities and Derivatives Risk -- Risk and Return Embedded into Derivatives Contracts -- Why an Industrial Company Is Interested in Derivatives -- Oil Derivatives and the Impact on the Price of Oil -- Risks Taken by Intel, Microsoft, and the Financial Industry -- Using Derivatives as a Tax Haven -- Market Psychology: Wealth Effect and Reverse Wealth Effect -- Reputational and Operational Risk -- Distinction between Ability to Perform and Willingness to Perform -- Troubles Facing Certified Public Accountants in Connection with Reputational Risk -- Corruption and Mismanagement Underpin the Failure to Control Operational Risk -- Case Study on Operational Risk and Reputational Risk With Orange County -- Fallout from Operational Risk Hits Both the Fund and the Broker -- Scandals Become Part of Reputational Risk When They Come to the Public Eye -- Managing Liabilities -- Assets, Liabilities, and the Balance Sheet -- Aftermath of Liabilities: Nissan Mutual Life and General American -- Earthquake after Liabilities Hit the Balance Sheet -- Sensitivity Analysis, Value-Added Solutions, and Gap Analysis -- Proper Recognition of Assets and Liabilities, and the Notion of Stress Testing -- Redimensioning the Balance Sheet through Asset Disposal -- Weight of Liabilities on a Company's Balance Sheet -- Virtual Balance Sheets and Real-Time Control -- Virtual Financial Statements and Their Contribution to Management -- Modeling of Assets and Liabilities Must Follow Rigorous Rules -- Stress Scenarios Help to Reveal the Nature of Underlying Conditions -- Forward-Looking Statements and Virtual Close at Cisco -- Preparing a Real-time Report on Hedging and Exposure -- From Virtual Balance Sheets to Finances of Virtual Corporations -- Managing the Liabilities Accounts of Virtual Companies -- Liquidity Management and the Risk of Default -- Liquid Assets and the Concept of Liquidity Analysis -- Liquidity and Capital Resources: The View from Lucent Technologies -- Who Is Responsible for Liquidity Management? -- Unrealistic Assumptions Characterizing a Famous Model -- Liquidity Ratios and Activity Ratios in the Service of Management -- Computation of Leverage and Default Including Derivatives Exposure -- Contingency Planning for Liquidity Management -- Market Liquidity and the Control of Risk -- Different Types of Market Liquidity and Money Supply -- Liquidity Risk, Volatility, and Financial Statistics -- Marking to Market and Marking to Model -- Liquidity Premium and the Control of Excess Liquidity -- Maturity Ladder for Liquidity Management -- The Role of Valuation Rules on an Institution's Liquidity Positions -- Cash Management -- Cash, Cash Flow, and the Cash Budget -- Basic Notions in Cash Management and the Cash Crunch -- Cash Flow Studies and the Cash Budget -- Flexible Budgeting and the Elaboration of Alternative Budgets -- Benefits to Be Gained through Adequacy of Cash Figures -- Cash Flow, Operating Cash Flow, and Free Cash Flow -- Earnings, Cash Flow, and Price-to-Earnings Growth -- Applying the Method of Intrinsic Value -- Cash on Hand, Other Assets, and Outstanding Liabilities -- Handling Cash Flows and Analyzing the Liquidity of Assets -- Art of Estimating Cash Flows from Liabilities -- Changes in Loans Policies and Their Aftermath -- Draining Cash Resources: The Case of Bank One -- Establishing Internal Control and Performance Standards -- Money Markets, Yield Curves, and Money Rates -- Money Market Instruments and Yield Volatility -- Spillover Effects in the Transnational Economy -- Major Factors Contributing to Global "Capital and Brains" Flows -- Yield Structure and Yield Curves -- Nominal Versus Real Interest Rates -- Challenges Arising from the Use of Electronic Money -- Mismatched Risk Profiles and Control by the Office of Thrift Supervision -- Interest-Rate Risk Measurement and Office of Thrift Supervision Guidelines -- Practical Example on the Role of Basis Points in Exposure -- Sensitivity to Market Risk and Post-Shock Portfolio Value -- Levels of Interest-Rate Risk and Quality of Risk Management -- Sensitivity Measures and Limits on Dealing with Complex Securities -- Tuning Examination Frequency to the Quality of an Institution -- Credit Risk, Market Risk, Leverage, and the Regulators -- Credit Risk, Daewoo, and Technology Companies -- Critical Factors in the Evaluation of Credit Risk -- Bankruptcy of Daewoo -- Cash Flows as Proxies of Expected and Unexpected Credit Risks -- Developing and Implementing Prudential Limits -- Taking Account of Management Quality in Establishing Credit Limits -- Using Six Sigma to Study Deteriorating Credit Risk -- Impact of the Internet on Credit Control -- Marking to Market and Marking to Model the Loans Book -- Can the Loans Portfolio Be Marked to Market? -- Using the Yield Curve as a Gateway to Sophisticated Solutions -- Mismatch in Capital Requirements between Commercial Banks and Investment Banks -- Creative Accounting Damages the Process of Securitization -- Securitization of Corporate Loans through Credit Derivatives -- Changes in Credit Risk and Market Risk Policies -- Art of Credit Risk and Market Risk Integration -- Is It Wise to Have Distinct Credit Risk and Market Risk Organizations? -- Calculating Capital Requirements for Credit Risk and Market Risk -- Concentration of Credit Risk, Precommitment, and Eigenmodels -- Improving Capital Adequacy and Assessing Hedge Effectiveness -- Summary: Management Blunders, Runaway Liabilities, and Technical Miscalculations Leading to Panics -- Mounting Risk of Turning Assets into Runaway Liabilities -- There Is No Way to Prognosticate the Aftermath of Leveraging the Liabilities Side of the Balance Sheet -- Throwing Money at the Problem Makes a Bad Situation Worse -- Is Financial Contagion Spreading on a Global Scale? -- Learning from Past Experience in Turning the Tide -- How Has the New Economy Redefined the Nature and Framework of Risk? -- The Destruction of the New Economy by Going Short in a Massive Way.