Credit and Weather Derivatives
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Credit derivatives are financial contracts that allow parties to transfer credit risk. They include credit default swaps, credit spread options, and credit linked notes. Credit default swaps allow one party to buy protection against losses from a borrower default. The protection buyer makes periodic payments to the protection seller in exchange for a payment if a credit event, like bankruptcy, occurs. Credit spread options give the buyer the right to purchase a bond at a stated spread above a benchmark rate if the market spread is higher on the exercise date. Credit linked notes transfer credit risk from the note issuer to investors. The issuer uses the investment proceeds to purchase collateral assets. If the borrower defaults, the issuer uses the collateral to pay
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FIM - Credit Derivatives PPT
The document discusses credit derivatives and the credit derivatives market in India. It provides information on different types of credit derivatives including credit default swaps (CDS), credit linked notes (CLN), and credit spread options (CSO). It then discusses the growth of the CDS market globally and the composition of the credit derivatives market. It outlines the benefits of credit derivatives for banks and other financial institutions in India. Finally, it discusses the role of the Clearing Corporation of India in facilitating CDS trading and settlement and provides details on the first CDS trades in India in 2011.
Fim project credit derivatives in india
This document discusses credit derivatives, which allow one party to transfer credit risk associated with a loan or bond to another party. The main types of credit derivatives are credit default swaps, total return swaps, credit linked notes, and credit spread options. Credit default swaps are the most common type and involve periodic payments from the protection buyer to the protection seller in exchange for a payoff if the underlying asset defaults. Risks of credit derivatives include credit risk, market risk, and legal risk related to counterparty failure and lack of standard documentation. The credit derivatives market has grown significantly in recent years as a way to diversify risk.
Credit Derivatives
This document provides a summary of credit derivatives and related financial instruments in 3 paragraphs:
Paragraph 1 summarizes the historical development of credit derivatives, including total return swaps pioneered by Bankers Trust to transfer credit risk without transferring loans.
Paragraph 2 explains how credit default swaps (CDS) emerged to meet the need for credit protection, functioning essentially as insurance against bankruptcy where the protection buyer pays premiums to the protection seller.
Paragraph 3 gives an overview of other credit derivative instruments including basket CDS, CDS indexes, synthetic CDOs, credit-linked notes, and credit spread options; it also distinguishes CDS from total return swaps and collateralized debt obligations (CDOs).
Sg credit derivatives overview
This document provides an introduction to credit derivatives. It defines credit risk and credit deterioration risk as the risks of financial loss due to a borrower defaulting or their credit quality decreasing. Credit derivatives allow investors to transfer these risks. The global market for credit derivatives has grown significantly. Common credit derivative products include credit default swaps, which transfer default risk, total rate of return swaps, which transfer both credit and price risk, and credit spread products. The document discusses the key features and uses of these different credit derivative products.
Credit default swaps
A credit default swap is a contract where a buyer pays a seller a periodic fee in exchange for a payout if a third party defaults on its debt obligations. For example, if party A lends to party B, party A can buy a CDS from party C to insure against party B's default. If party B defaults, party C pays party A instead of party B. CDS contracts transfer credit risk from one party to another and resemble insurance policies against borrower defaults.
CDS IN INDIA
The document discusses the introduction of credit default swaps (CDS) for corporate bonds in India and compares it to CDS markets in other countries. Some key points:
1) CDS allow an entity to hedge or speculate on the credit risk of a bond or loan by making payments to another party in exchange for a payoff if default occurs.
2) The RBI has proposed strict regulations for India's CDS market including requiring physical settlement, limiting naked positions, and restricting participants.
3) The Indian CDS market differs from those that caused issues abroad as it only allows CDS on single entities rather than packages of loans, and requires the buyer to hold the underlying bond.
CDS
Credit default swaps (CDS) are contracts that transfer credit risk, where the buyer makes periodic payments to the seller in exchange for a payment if the referenced entity defaults. The seller provides credit protection and collects premiums, while the buyer is protected against losses in case of default. A CDS can be used to hedge against losses on a bond by pairing it with an interest rate swap that mirrors the bond's cash flows. The difference between the synthetic credit risk premium priced into a CDS and that of the underlying bond's cash market is called the "basis."
50023871 a-project-report-on-credit-default-swaps
Credit default swaps (CDS) emerged in the 1990s as a way for banks to transfer credit risk without selling loans. The CDS market grew rapidly after 2000 as it became more standardized and parties unrelated to referenced assets began speculating. By 2007, the notional value of CDS exceeded the value of underlying assets by $20 trillion as speculation increased. Problems with subprime mortgages and related collateralized debt obligations exposed issues as CDS sellers struggled to pay claims. Insurance companies faced risks both as CDS buyers and sellers, with potential losses if counterparties or referenced assets defaulted. The rapid growth and increased speculation in CDS contributed to systemic risks revealed by the financial crisis.
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FIM - Credit Derivatives PPT
The document discusses credit derivatives and the credit derivatives market in India. It provides information on different types of credit derivatives including credit default swaps (CDS), credit linked notes (CLN), and credit spread options (CSO). It then discusses the growth of the CDS market globally and the composition of the credit derivatives market. It outlines the benefits of credit derivatives for banks and other financial institutions in India. Finally, it discusses the role of the Clearing Corporation of India in facilitating CDS trading and settlement and provides details on the first CDS trades in India in 2011.
Fim project credit derivatives in india
This document discusses credit derivatives, which allow one party to transfer credit risk associated with a loan or bond to another party. The main types of credit derivatives are credit default swaps, total return swaps, credit linked notes, and credit spread options. Credit default swaps are the most common type and involve periodic payments from the protection buyer to the protection seller in exchange for a payoff if the underlying asset defaults. Risks of credit derivatives include credit risk, market risk, and legal risk related to counterparty failure and lack of standard documentation. The credit derivatives market has grown significantly in recent years as a way to diversify risk.
Credit Derivatives
This document provides a summary of credit derivatives and related financial instruments in 3 paragraphs:
Paragraph 1 summarizes the historical development of credit derivatives, including total return swaps pioneered by Bankers Trust to transfer credit risk without transferring loans.
Paragraph 2 explains how credit default swaps (CDS) emerged to meet the need for credit protection, functioning essentially as insurance against bankruptcy where the protection buyer pays premiums to the protection seller.
Paragraph 3 gives an overview of other credit derivative instruments including basket CDS, CDS indexes, synthetic CDOs, credit-linked notes, and credit spread options; it also distinguishes CDS from total return swaps and collateralized debt obligations (CDOs).
Sg credit derivatives overview
This document provides an introduction to credit derivatives. It defines credit risk and credit deterioration risk as the risks of financial loss due to a borrower defaulting or their credit quality decreasing. Credit derivatives allow investors to transfer these risks. The global market for credit derivatives has grown significantly. Common credit derivative products include credit default swaps, which transfer default risk, total rate of return swaps, which transfer both credit and price risk, and credit spread products. The document discusses the key features and uses of these different credit derivative products.
Credit default swaps
A credit default swap is a contract where a buyer pays a seller a periodic fee in exchange for a payout if a third party defaults on its debt obligations. For example, if party A lends to party B, party A can buy a CDS from party C to insure against party B's default. If party B defaults, party C pays party A instead of party B. CDS contracts transfer credit risk from one party to another and resemble insurance policies against borrower defaults.
CDS IN INDIA
The document discusses the introduction of credit default swaps (CDS) for corporate bonds in India and compares it to CDS markets in other countries. Some key points:
1) CDS allow an entity to hedge or speculate on the credit risk of a bond or loan by making payments to another party in exchange for a payoff if default occurs.
2) The RBI has proposed strict regulations for India's CDS market including requiring physical settlement, limiting naked positions, and restricting participants.
3) The Indian CDS market differs from those that caused issues abroad as it only allows CDS on single entities rather than packages of loans, and requires the buyer to hold the underlying bond.
CDS
Credit default swaps (CDS) are contracts that transfer credit risk, where the buyer makes periodic payments to the seller in exchange for a payment if the referenced entity defaults. The seller provides credit protection and collects premiums, while the buyer is protected against losses in case of default. A CDS can be used to hedge against losses on a bond by pairing it with an interest rate swap that mirrors the bond's cash flows. The difference between the synthetic credit risk premium priced into a CDS and that of the underlying bond's cash market is called the "basis."
50023871 a-project-report-on-credit-default-swaps
Credit default swaps (CDS) emerged in the 1990s as a way for banks to transfer credit risk without selling loans. The CDS market grew rapidly after 2000 as it became more standardized and parties unrelated to referenced assets began speculating. By 2007, the notional value of CDS exceeded the value of underlying assets by $20 trillion as speculation increased. Problems with subprime mortgages and related collateralized debt obligations exposed issues as CDS sellers struggled to pay claims. Insurance companies faced risks both as CDS buyers and sellers, with potential losses if counterparties or referenced assets defaulted. The rapid growth and increased speculation in CDS contributed to systemic risks revealed by the financial crisis.
Credit default swap aapu
This document discusses credit default swaps (CDS). A CDS is an agreement where the buyer makes periodic payments to the seller, who agrees to make a payment to the buyer if a loan defaults. CDS can be used to hedge against default risk or speculate on credit risk. They allow entities to transfer default risk to investors willing to bear it. The document outlines the terms of CDS agreements, how they are used for hedging versus speculation, and provides examples of each.
CDS - Credit Default Swap
This document discusses credit default swaps (CDS), including:
- CDS are a type of derivative that functions as a form of default insurance on a debt obligation.
- In a basic CDS transaction, the protection buyer makes periodic payments to the protection seller, and in exchange receives a payoff if the reference entity defaults or experiences another credit event.
- CDS markets grew rapidly in the early 2000s but also contributed to the 2008 financial crisis when American International Group's massive CDS exposures led to its government bailout.
Introduction to CDS
The document provides an overview of credit default swaps (CDS). It defines a CDS as a contract where the protection buyer makes periodic payments to the protection seller in exchange for a payout if a loan defaults. The document outlines the key parties in a CDS deal including the protection buyer, protection seller, and reference entity. It provides an example of how CDS can protect a bank if the company it loaned money to defaults. Overall, the document summarizes what a CDS is, how it works, and some of the risks involved.
Credit derivatives || credit risk management || SHAHBAZ JAFFRI ||
Credit derivatives are financial instruments whose value is derived from an underlying credit asset like a bond or loan. The two main types are credit default swaps and total return swaps. Credit default swaps allow one party to transfer the credit risk of a bond or loan to another party. Total return swaps transfer both the credit risk and interest rate risk of the underlying asset. These instruments allow investors to take on or reduce exposure to specific credit risks.
Credit Default Swaps
A credit default swap (CDS) is a contract where the buyer makes periodic payments to the seller in exchange for a payoff if a third party defaults on its debt obligations. It allows one party to transfer the credit risk of a loan or bond to another party. For example, a bank (buyer) pays premiums to a hedge fund (seller) to insure against the risk of a borrower defaulting on its loan. If the borrower defaults, the seller pays the buyer the full value of the loan.
Introduction to credit derivatives
The document introduces credit derivatives and their key types. Credit derivatives allow parties to transfer credit risk by buying and selling protection against the default of a reference entity. The main types discussed are credit default swaps, credit spread options, and credit-linked notes. Credit default swaps allow a party to buy protection, paying a premium in exchange for a payout if the reference entity defaults. Credit spread options grant the right to buy a bond at a strike spread. Credit-linked notes transfer risk from the issuer to investors by tying note repayment to a reference loan.
7_Credit Derivatives
This document provides an overview of credit derivatives and their role in credit risk management. It defines credit derivatives as instruments that insure against adverse movements in a borrower's credit quality. Various credit derivative products are examined, including total return swaps, credit default swaps, credit linked notes, collateralized debt obligations, and collateralized loan obligations. The growth and decline of these markets leading up to and during the global financial crisis is also discussed. The document aims to explain how credit derivatives can be used to transfer and manage credit risk.
Derivative
This document provides an overview and introduction to derivatives. It defines derivatives as contracts that derive their value from an underlying asset, and lists some common types including forwards, futures, options, swaps, and various structured products. It states that most derivatives are traded over-the-counter or on exchanges, and that they are one of the main categories of financial instruments along with stocks and debt.
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2) There are various types of bonds including callable/putable bonds which allow early redemption, and convertible bonds which can be exchanged for stock.
3) Bond prices are inversely related to interest rates so they carry risks like interest rate risk, reinvestment risk, credit risk, and call risk which could impact the bond value. Various factors like ratings influence the credit risk.
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first american bank- credit default swaps
- First American Bank is considering using a credit default swap to help mitigate Charles Bank International's credit risk in providing a $50 million loan to CapEx Unlimited, a telecommunications company.
- Through the CDS, CBI would make periodic fee payments to First American Bank in exchange for credit protection on the loan to CapEx. This would transfer some of the credit risk from CBI to First American Bank.
- There are various ways to calculate the appropriate spread for the CDS, including using historical default data or bond prices of comparable companies. The estimated spread would likely be between 1.3-5.5%.
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Bonds and Its types
A bond is a long-term debt instrument issued by companies and governments. When an investor purchases a bond, they are loaning money to the bond issuer. The issuer pays regular interest payments to the investor and repays the principal at maturity. Bonds have characteristics like face value, coupon rate, maturity date, and issue price. A trustee acts on behalf of bondholders, and an indenture agreement sets out the terms and conditions of the bonds. There are different types of bonds like secured bonds, unsecured bonds, debentures, subordinate debentures, income bonds, junk bonds, and mortgage bonds.
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Collateralized debt obligations (CDOs) are financial products backed by a portfolio of fixed income assets. Between 2000-2009, $4 trillion worth of CDOs were issued by banks moving loans and debts off their balance sheets. This was enabled by the origination of subprime loans to borrowers with poor credit, which were then packaged into CDOs and sold to investors. However, as the housing market declined and borrowers defaulted, CDOs plummeted in value. Major financial firms like Bear Stearns and Merrill Lynch suffered huge losses, and the fallout of the subprime crisis led to the 2008 global financial crisis.
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The document discusses various types of fixed income securities including bonds, their key features such as coupon rate, maturity date, and yield. It also covers bond market sectors such as the domestic bond market, foreign bond market, and international bond market. Various government bond issuers from countries around the world are also outlined.
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CDO, CDS and American Crisis
The document discusses collateralized debt obligations (CDOs). It defines CDOs as financial products that pool together cash-generating assets and repackage them into tranches of varying risk and return. The document outlines the history of CDOs, how they address issues like prepayment risk, and the parties involved like investment banks, CDO managers, and investors. It then discusses problems like undercollateralization that contributed to the 2008 housing crisis, when highly rated CDOs became worthless due to rising mortgage defaults.
bond and its types
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This document discusses how stock market transactions occur. It describes how investors place orders with brokers to buy and sell stocks. It also discusses different order types like market orders, limit orders, and stop orders. The document then covers margin trading, short selling, and investing in stock indexes. It explains how trades are executed, including the roles of floor brokers, specialists, and market makers. It also discusses how electronic communication networks and program trading have changed how orders are handled.
Classes of bonds (Classification of Bonds as to type)
This document classifies bonds based on the type of security backing the bond. It discusses four main classes: 1) debentures which are backed by the general credit and assets of the issuing company; 2) mortgage bonds which are backed by a pledge of specific property as collateral; 3) bonds backed by both the original collateral and the general credit of another guaranteeing company; and 4) joint bonds backed by the combined earnings of allied companies that jointly own collateral property. Within mortgage bonds, it further distinguishes between types of real estate mortgages and chattel mortgages.
New microsoft word dfd
This document provides an overview of credit derivatives, including:
- Their origin in the 1980s securitization market and formal launch in 1991.
- Definitions, including that they allow one party to transfer credit risk of a reference asset to another party.
- Types, including credit default swaps, total return swaps, and credit linked notes.
- Benefits for banks and financial institutions, such as freeing up capital, maintaining client relationships, constructing customized risk portfolios, and diversifying credit risk.
credit ref -questions ans .docx
Credit default swaps (CDS) are contracts that transfer credit risk from one party to another. A CDS controls credit risk, while an interest rate swap controls interest rate risk. If a reference entity experiences a credit event like default, the protection seller compensates the buyer. Restructuring is a controversial credit event because it can trigger a payout even for routine debt restructurings. A CDS has an option-like payoff because payment depends on a credit event occurring. For asset-backed securities, the focus is on cash flow adequacy rather than bankruptcy. Physical settlement of a CDS involves delivery of the reference obligation, while cash settlement involves a payment equal to the price difference.
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This document discusses credit default swaps (CDS), including:
- CDS are a type of derivative that functions as a form of default insurance on a debt obligation.
- In a basic CDS transaction, the protection buyer makes periodic payments to the protection seller, and in exchange receives a payoff if the reference entity defaults or experiences another credit event.
- CDS markets grew rapidly in the early 2000s but also contributed to the 2008 financial crisis when American International Group's massive CDS exposures led to its government bailout.
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The document provides an overview of credit default swaps (CDS). It defines a CDS as a contract where the protection buyer makes periodic payments to the protection seller in exchange for a payout if a loan defaults. The document outlines the key parties in a CDS deal including the protection buyer, protection seller, and reference entity. It provides an example of how CDS can protect a bank if the company it loaned money to defaults. Overall, the document summarizes what a CDS is, how it works, and some of the risks involved.
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Credit derivatives are financial instruments whose value is derived from an underlying credit asset like a bond or loan. The two main types are credit default swaps and total return swaps. Credit default swaps allow one party to transfer the credit risk of a bond or loan to another party. Total return swaps transfer both the credit risk and interest rate risk of the underlying asset. These instruments allow investors to take on or reduce exposure to specific credit risks.
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A credit default swap (CDS) is a contract where the buyer makes periodic payments to the seller in exchange for a payoff if a third party defaults on its debt obligations. It allows one party to transfer the credit risk of a loan or bond to another party. For example, a bank (buyer) pays premiums to a hedge fund (seller) to insure against the risk of a borrower defaulting on its loan. If the borrower defaults, the seller pays the buyer the full value of the loan.
Introduction to credit derivatives
The document introduces credit derivatives and their key types. Credit derivatives allow parties to transfer credit risk by buying and selling protection against the default of a reference entity. The main types discussed are credit default swaps, credit spread options, and credit-linked notes. Credit default swaps allow a party to buy protection, paying a premium in exchange for a payout if the reference entity defaults. Credit spread options grant the right to buy a bond at a strike spread. Credit-linked notes transfer risk from the issuer to investors by tying note repayment to a reference loan.
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This document provides an overview of credit derivatives and their role in credit risk management. It defines credit derivatives as instruments that insure against adverse movements in a borrower's credit quality. Various credit derivative products are examined, including total return swaps, credit default swaps, credit linked notes, collateralized debt obligations, and collateralized loan obligations. The growth and decline of these markets leading up to and during the global financial crisis is also discussed. The document aims to explain how credit derivatives can be used to transfer and manage credit risk.
Derivative
This document provides an overview and introduction to derivatives. It defines derivatives as contracts that derive their value from an underlying asset, and lists some common types including forwards, futures, options, swaps, and various structured products. It states that most derivatives are traded over-the-counter or on exchanges, and that they are one of the main categories of financial instruments along with stocks and debt.
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1) A bond is a debt investment where an investor loans money to an entity for a defined period at a fixed or floating interest rate. Bonds pay periodic interest payments and repay the principal at maturity.
2) There are various types of bonds including callable/putable bonds which allow early redemption, and convertible bonds which can be exchanged for stock.
3) Bond prices are inversely related to interest rates so they carry risks like interest rate risk, reinvestment risk, credit risk, and call risk which could impact the bond value. Various factors like ratings influence the credit risk.
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- First American Bank is considering using a credit default swap to help mitigate Charles Bank International's credit risk in providing a $50 million loan to CapEx Unlimited, a telecommunications company.
- Through the CDS, CBI would make periodic fee payments to First American Bank in exchange for credit protection on the loan to CapEx. This would transfer some of the credit risk from CBI to First American Bank.
- There are various ways to calculate the appropriate spread for the CDS, including using historical default data or bond prices of comparable companies. The estimated spread would likely be between 1.3-5.5%.
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This document provides an overview of collateralized debt obligations (CDOs) focused on commercial real estate. It discusses the taxonomy and anatomy of CDOs, including the types of assets they contain, their capital structure, and the parties involved such as issuers, investors, and rating agencies. It also describes the evolution of CDO collateral over time from assets like REIT debt and CMBS to include riskier products like whole loans, B-notes, and mezzanine loans.
Bonds and Its types
A bond is a long-term debt instrument issued by companies and governments. When an investor purchases a bond, they are loaning money to the bond issuer. The issuer pays regular interest payments to the investor and repays the principal at maturity. Bonds have characteristics like face value, coupon rate, maturity date, and issue price. A trustee acts on behalf of bondholders, and an indenture agreement sets out the terms and conditions of the bonds. There are different types of bonds like secured bonds, unsecured bonds, debentures, subordinate debentures, income bonds, junk bonds, and mortgage bonds.
Collateral Debt Obligation – A Perspective
Collateralized debt obligations (CDOs) are financial products backed by a portfolio of fixed income assets. Between 2000-2009, $4 trillion worth of CDOs were issued by banks moving loans and debts off their balance sheets. This was enabled by the origination of subprime loans to borrowers with poor credit, which were then packaged into CDOs and sold to investors. However, as the housing market declined and borrowers defaulted, CDOs plummeted in value. Major financial firms like Bear Stearns and Merrill Lynch suffered huge losses, and the fallout of the subprime crisis led to the 2008 global financial crisis.
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The document discusses various types of fixed income securities including bonds, their key features such as coupon rate, maturity date, and yield. It also covers bond market sectors such as the domestic bond market, foreign bond market, and international bond market. Various government bond issuers from countries around the world are also outlined.
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The document discusses collateralized debt obligations (CDOs). It defines CDOs as financial products that pool together cash-generating assets and repackage them into tranches of varying risk and return. The document outlines the history of CDOs, how they address issues like prepayment risk, and the parties involved like investment banks, CDO managers, and investors. It then discusses problems like undercollateralization that contributed to the 2008 housing crisis, when highly rated CDOs became worthless due to rising mortgage defaults.
bond and its types
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This document discusses how stock market transactions occur. It describes how investors place orders with brokers to buy and sell stocks. It also discusses different order types like market orders, limit orders, and stop orders. The document then covers margin trading, short selling, and investing in stock indexes. It explains how trades are executed, including the roles of floor brokers, specialists, and market makers. It also discusses how electronic communication networks and program trading have changed how orders are handled.
Classes of bonds (Classification of Bonds as to type)
This document classifies bonds based on the type of security backing the bond. It discusses four main classes: 1) debentures which are backed by the general credit and assets of the issuing company; 2) mortgage bonds which are backed by a pledge of specific property as collateral; 3) bonds backed by both the original collateral and the general credit of another guaranteeing company; and 4) joint bonds backed by the combined earnings of allied companies that jointly own collateral property. Within mortgage bonds, it further distinguishes between types of real estate mortgages and chattel mortgages.
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Similar to Credit and Weather Derivatives
New microsoft word dfd
This document provides an overview of credit derivatives, including:
- Their origin in the 1980s securitization market and formal launch in 1991.
- Definitions, including that they allow one party to transfer credit risk of a reference asset to another party.
- Types, including credit default swaps, total return swaps, and credit linked notes.
- Benefits for banks and financial institutions, such as freeing up capital, maintaining client relationships, constructing customized risk portfolios, and diversifying credit risk.
credit ref -questions ans .docx
Credit default swaps (CDS) are contracts that transfer credit risk from one party to another. A CDS controls credit risk, while an interest rate swap controls interest rate risk. If a reference entity experiences a credit event like default, the protection seller compensates the buyer. Restructuring is a controversial credit event because it can trigger a payout even for routine debt restructurings. A CDS has an option-like payoff because payment depends on a credit event occurring. For asset-backed securities, the focus is on cash flow adequacy rather than bankruptcy. Physical settlement of a CDS involves delivery of the reference obligation, while cash settlement involves a payment equal to the price difference.
CREDIT DERIVATIVES
A credit derivative is a financial contract in which the underlying is a credit asset (debt or fixed-income instrument). The purpose of a credit derivative is to transfer credit risk (and all or part of the income stream in relation to the borrower) without transferring the asset itself.
A credit derivative serves as a sort of insurance policy allowing an originator or buyer to transfer the risk on a credit asset (of which he may or may not be the owner) to the seller(s) of the protection or counterparties.
Credit Derivatives.pptx.........................
Credit derivatives are financial instruments that allow parties to transfer credit risk of underlying entities like loans or bonds between each other. There are various types of credit derivatives, including credit default swaps (CDS) where one party pays an annual fee in exchange for a payout if the underlying entity defaults, and synthetic CDOs which invest in CDS or other assets to obtain exposure to credit risks. While credit derivatives help distribute risk, their value depends on the credit quality of both the underlying borrower and the counterparty assuming the risk.
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This document discusses various types of long-term debt instruments, preferred stock, and common stock. It defines key terms related to bonds such as par value, coupon rate, maturity, and bond ratings. It describes different types of bonds including debentures, subordinated debentures, income bonds, junk bonds, mortgage bonds, and equipment trust certificates. The document also discusses preferred stock features like cumulative and participating dividends. Finally, it covers common stock terms like authorized shares, issued shares, outstanding shares, book value, and liquidating value.
Chapter 6.Long -Term Financing-Debt
This document discusses sources of long-term financing for businesses. It focuses on debt financing through the issuance of bonds. It describes the basic features of bonds, including par value, coupon rate, maturity date, and current yield. It outlines the roles of trustees and indentures in bond issuances. It also discusses the risks associated with bonds, such as interest rate risk, reinvestment risk, default risk, inflation risk, and liquidity risk. Finally, it covers various types of bonds like zero-coupon bonds, floating-rate notes, junk bonds, convertible bonds, and Eurobonds.
Sub Prime Mortgage Crisis
Structured finance is a sector that transfers risk using complex legal entities like securitization and tranching. Securitization pools debt instruments and issues new securities backed by the pool, while tranching splits securities into different risk levels. Mortgage-backed securities represent claims on cash flows from mortgage loans. Collateralized mortgage obligations (CMOs) issue bonds backed by mortgages and use tranching to create bonds of varying risk levels, like sequential or parallel tranching. The subprime mortgage crisis originated in the late 1990s and became apparent in 2007, caused by risky lending practices and the shadow banking system's involvement in securitization.
ch21 - Econ 442 - financial markets Par 1 of 2 (1).pdf
The chapter discusses bond pricing and interest rate theory. It covers different types of bonds like government, corporate, municipal, and mortgage bonds. It also defines various interest rates used in bond valuation like spot rates, yield to maturity, current yield, and forward rates. Spot rates refer to the yield on zero-coupon bonds for different time periods. Forward rates represent the expected future interest rates for new loans committed today. The timing and definitions of cash flows and interest rates are important for accurately pricing and comparing bonds.
Shipping Finance
Shipping companies have various financing options for acquiring new and second-hand vessels beyond traditional sources like shares and bonds. For new vessels, companies can obtain loans from banks for full payment or installment payments, or receive seller's credit from shipbuilders with installment payments over the construction period secured by a mortgage on the vessel. For second-hand vessels, banks primarily provide term loans or revolving credit facilities secured by the vessel. Syndicated loans with multiple banks and mezzanine financing using hybrid debt/equity instruments are also options.
Shipping Finance
Shipping companies have various financing options for acquiring new and second-hand vessels beyond traditional sources like shares and bonds. For new vessels, companies can obtain loans from banks for full payment or installment payments, or receive seller's credit from shipbuilders with installment payments over the construction period secured by a mortgage on the vessel. For second-hand vessels, banks primarily provide term loans or revolving credit facilities secured by the vessel. Syndicated loans with multiple banks and mezzanine financing using hybrid debt/equity instruments are also options.
Ch08
This chapter discusses several factors that influence interest rates: marketability, liquidity, default risk, call privileges, prepayment risk, convertibility, and taxation. It explains how each of these factors affects the promised and expected yields on different types of financial assets. The risk-free interest rate underlies all other interest rates, which are scaled upward depending on their degree of additional risk factors like default risk or prepayment risk.
Nishka october issue 2011
The document is a financial newsletter that provides an overview of recent economic and market events. It discusses declines in major global stock indices like the Dow Jones, S&P 500, and indices in Europe and Asia, with losses ranging from 7-11% for the previous month. The Indian stock indices also saw significant declines, with the Sensex losing over 1200 points and forecasts that the Nifty will also tumble. The newsletter provides economic indicators, a column on credit default swaps, and sections on equity research, current events, quizzes, and more.
17. Corporate Bonds.pptx
This document discusses various topics related to corporate bonds, including: bond indentures which set obligations of issuers and rights of bondholders; the role of corporate trustees in representing bondholders; classifications of bonds by issuer, maturity, interest rate, and collateral; methods for retiring bonds before maturity like calls and sinking funds; risks like credit spread risk and event risk; high-yield bonds and their features; and concepts like default rates, recovery rates, and expected returns.
Mj Keu ch15mm
This document provides an overview of short-term financing sources and calculations. It discusses spontaneous financing sources like accounts payable and accrued expenses. It also covers negotiated short-term financing options such as commercial paper, bankers' acceptances, unsecured loans, lines of credit, and transaction loans. The document includes examples of calculating costs associated with trade credit, short-term borrowing rates, compensating balances, and commitment fees.
Long Term Debt Instrument
Long-term debt consists of loans and financial obligations lasting over one year. Long-term debt for a company would include any financing or leasing obligations that are to come due in a greater than 12-month period. Long-term debt also applies to governments
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ch21 - Econ 442 - financial markets Par 1 of 2 (1).pdf
ch21 - Econ 442 - financial markets Par 1 of 2 (1).pdf
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IBM eliminated 14,500 jobs in 2005, mostly in India, as part of a strategy to cut costs by moving jobs to "strategic low-cost geographies." The company also gave away some intellectual property and supported open-source software to increase its customer base and competitive advantage. While IT may remain complex, IBM believes customers will continue needing help solving business problems, so it aims to maintain its services business.
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This document contains 10 multiple choice questions about product strategy concepts from a chapter. Services require more quality control and credibility than durable goods. Design gives competitive advantages like variety for customers. Effective packaging attracts attention and positively represents the brand. Customer training is providing assistance for new users. Globe launched their TM brand using down-market line stretching to target a new customer segment.
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2. It provides 3 cases showing the growth of Happy Resorts over time and proposes organizational structures for each case. Case 1 is for a new small resort, Case 2 for an established resort owner, and Case 3 for a large international owner.
3. The proposed structures include departments like food & beverage, front office, housekeeping, and sales & marketing. Case 1 focuses on cost leadership and customer intimacy. Case 2 on differentiation and product leadership. Case 3 on cost leadership and operational excellence as a large business.
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To compete with value-based companies that offer more for less, companies should deliver high quality at low prices to attract consumers. They can compete by keeping costs low, differentiating their offerings in areas that give advantages, and executing processes efficiently. However, a strictly low-cost business model may only be right if it increases competitiveness in existing businesses or advantages in new ventures, otherwise companies are better focusing on differentiation and effective execution.
Point A
This document lists various search engine profiles for Ma. Camille Villagarcia, including Google, Yahoo, and Bing. It also includes slight variations of her name such as adding "Ma." and using her nickname "Macky".
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- 1. Credit and Weather Derivatives Liyan Dizon Marose Monedero Macky Villagarcia Feb 11, 2011
- 5. Growth in Credit Derivatives Source: British Bankers Association Credit Derivatives Report
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- 20. Credit and Weather Derivatives Liyan Dizon Marose Monedero Macky Villagarcia Feb 11, 2011