O'Reilly logo

Beautiful Architecture by Diomidis Spinellis, Georgios Gousios

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

The Functional Examples

The overall goal of the article and presentation is to propose a convenient mechanism for describing and handling financial contracts, especially modern financial instruments that can be very complicated, as in this example from the presentation (in whose numerical values one can hear the nostalgic echo of a time when major currencies enjoyed a different relationship):

“Against the promise to pay USD 2.00 on December 27 (the price of the option), the holder has the right, on December 4, to choose between:

  • Receiving USD 1.95 on December 29, or

  • Having the right, on December 11, to choose between:

    • Receiving EUR 2.20 on December 28, or

    • Having the right, on December 18, to choose between:

      • Receiving GBP 1.20 on December 30, or

      • Paying immediately one more EUR and receiving EUR 3.20 on December 29”

(Throughout this section, extracts in quotes are direct citations from the presentation or the article. Elements not in quotes are our interpretations and comments.)

As a pedagogical device to illustrate the issues, the presentation starts with a toy example: puddings rather than contracts. From the precise description of a pudding, it should be possible to “compute the sugar content,” “estimate the time to make” the pudding, and obtain “instructions to make it.” A “bad approach” would be to:

  • “List all puddings (Trifle, lemon upside-down pudding, Dutch apple cake, Christmas pudding)

  • For each pudding, write down sugar content, time to make, instructions, etc.”

Although the presentation ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required