The objective of this work is to develop an econometric model which is less complex than the Wilkie s model for valuing and managing financial risks associated with benefit options regarding segregated fund contracts in India. The empirical studies conducted in this thesis revealed the following results. The South Asian stock markets (Sri-Lanka, India and Pakistan) did not show evidence of unit-roots, but the returns are correlated. Therefore, the most appropriate model capable of capturing the long-term equity return process for a practical dynamic hedging of segregated fund contracts in...