When is a credit default swap useful? Why?
Answer to relevant QuestionsWhat 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 type of credit derivatives contract would you recommend for each of the following situations:a. A bank plans to issue a group of bonds backed by a pool of credit card loans but fears that the default rate on these ...What are structured notes and stripped securities? What unusual features do they contain?Why do depository institutions face pledging requirements when they accept government deposits?A municipal bond has a $1,000 face (par) value. Its yield to maturity is 5 percent, and the bond promises its holders $60 per year in interest (paid annually) for the next 10 years before it matures. What is the ...
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