Why is “restructuring” the most controversial credit event?
Answer to relevant Questions(a) What is the advantage of a call provision for an issuer? (b) What are the disadvantages of a call provision for the bondholder? (a) What is counterparty risk? (b) Give two examples of transactions where one faces counterparty risk. What is a deferred coupon bond? Explain why you agree or disagree with the following statement: “The price of a floater will always trade at its par value.” Why does a credit default swap have an option-type payoff?
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