4 ms·
credit default swap is not that complex. it's just insurance against a bond default. anyone with basic arithmitic can price one.
by retube 17y ago
credit default swap is not that complex. it's just insurance against a bond default. anyone with basic arithmitic can price one.
- ryanclemson 17y agoactually, a credit default swap is not insurance at all. thats how we got into the whole sub-prime crisis of 2008.
- cwan 17y agoIt was the excess underpriced leverage that got us into the whole subprime crisis of 2008. CDS's are financial tools that allow buyers and sellers to expose themselves to certain risks. Whether this is used for insurance/hedge or as a bet on a certain outcome is and should be at the discretion of the buyer/seller.