How do the cash flows for a CDS swap differ from that of a single-name CDS?
Answer to relevant QuestionsHow do market participants gauge the default risk of a bond issue? Explain whether or not an investor can determine today what the cash flow of a floating-rate bond will be. How does one approximate the CDS spread for a single-name CDS on a corporate entity? How are index CDS used by portfolio managers? Comment on the following statement: “Restructuring is included in credit default swaps and therefore the reduction in a reference obligation’s interest rate will result in the triggering of a payout. This exposes the ...
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