What is a credit swap? For what kinds of situations was it developed?
Answer to relevant QuestionsWhat is a total return swap? What advantages does it offer the swap beneficiary institution?Suppose that a bank securitizes a package of its loans that bears a gross annual interest yield of 13 percent. The securities issued against the loan package promise interested investors an annualized yield of 8.25 percent. ...What risks do credit derivatives pose for financial institutions using them? In your opinion what should regulators do about the recent rapid growth of this market, if anything?What are the principal money market and capital market instruments available to institutions today? What are their most important characteristics?Suppose a corporate bond an investments officer would like to purchase for her bank has a before-tax yield of 8.98 percent and the bank is in the 35 percent federal income tax bracket. What is the bond's after-tax gross ...
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