Question: 5. What is CDS? How does CDS contract work? 6. CDS is an insurance policy. What kind of risk is under the insurance? How does

5. What is CDS? How does CDS contract work? 6. CDS

5. What is CDS? How does CDS contract work? 6. CDS is an insurance policy. What kind of risk is under the insurance? How does it insurance the risk? 7. What role does the seller of the CDS play in the insurance policy? 8. Which side of the CDS is buying an insurance policy? 9. What is premium on CDS? What is the key factor influencing the premium? (Think about your car insurance. What makes your monthly premium higher?) 10. What is the minimum capital requirement to enter the CDS market? 11. Why is selling a CDS a very high leverage transaction (a transaction involves a lot of borrowing)

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