Author Archives: Thomas Coleman

About Thomas Coleman

Thomas S. Coleman is Senior Advisor at the Becker Friedman Institute for Research in Economics and Adjunct Professor of Finance at the Booth School of Business at the University of Chicago. Prior to returning to academia, Mr. Coleman worked in the finance industry for more than twenty years with considerable experience in trading, risk management, and quantitative modeling. Mr. Coleman earned a PhD in economics from the University of Chicago and a BA in physics from Harvard College.

Household Debt and Spending

My fear is that the current recovery is storing up problems for the future. Household debt continues to decline, and the savings rate has increased. This should be good news for the recovery of the economy: much of the recent … Continue reading

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A Primer on Credit Default Swaps

What is a CDS? How does a CDS behave in response to changes in the markets? How does one value a CDS? What is the risk? This primer aims to answer these questions for plain-vanilla single-name CDS, showing that a … Continue reading

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Inflation Background and Current Situation

As Milton Friedman said, “Inflation is always and everywhere a monetary phenomenon.” Bernanke in his textbook says “The existence of a close link between the price level and the money supply in an economy is one of the oldest and … Continue reading

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Thoughts on the Current Macroeconomic Environment

The current macroeconomic environment may appear complicated but is much simplified by focusing on two issues: First, the recent speculative boom and bust and the consequences following there from; Second the increases in spending (fall in “savings rate”) over recent … Continue reading

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Estimating The Correlation Of Non-Contemporaneous Time-Series

This paper examines the statistical problem of estimating the correlation of non-contemporaneous time-series observations such as daily returns for the FTSE and S&P500 stock indexes. A December 2007 .pdf version is available on SSRN, and there is an abridged version.

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A Practical Guide To Bonds And Swaps

This manual provides a practical introduction to the fixed income capital markets. It is intended to provide the practical, institutional aspects of the markets together with the fundamental concepts used in today’s capital markets. In line with their ubiquity throughout … Continue reading

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Fitting Forward Rates To Market Data

This paper has two purposes. First, to outline a general framework or methodology for fitting the forward curve to market data. Second, to report on and compare results from fitting forward curves using three particular functional forms: piece-wise constant forward … Continue reading

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Effective degrees of freedom during the radiation era

This is a physics paper that grew out of my collaboration with Matts Roos in his publication of the 3rd edition of his text Introduction to Cosmology. This paper updates the curves of the effective degrees of freedom for the … Continue reading

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Compensating Fund Managers for Risk-Adjusted Performance

This paper (Journal of Alternative Investments, volume 2, number 3, winter 1999, by Thomas S. Coleman and Laurence B. Siegel) explores a risk-adjusted performance fee structure for hedge funds that addresses incentive compatibility and helps reduce asymmetry, while at the … Continue reading

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Accurately Estimating and Building the Yield Curve

Presentation for Risk Magazine Yield Curve Course, October 1999. Using methodology from “Fitting Forward Rates to Market Data,” discusses the general approach to fitting the yield curve, mathematics of yield and forward curves, a simple example, use of and criteria … Continue reading

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