David says that CDS is essentially the same as buying default insurance on the risky corporate bond,

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David says that “CDS is essentially the same as buying default insurance on the risky corporate bond, where the buyer pays for the default protection and the seller sells the protection.” Thus he concludes that CDS is the same as other insurance. Comment on David’s conclusion.

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Introduction To Corporate Finance

ISBN: 9781118300763

3rd Edition

Authors: Laurence Booth, Sean Cleary

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