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[edit] unicredit
Suggestion by 151.13.122.115 on 2009-03-06 14:26:59
unicredit
could you explain what you mean? Walim 09:46, March 6, 2009 (PST)
[edit] It might be easier to understand this difficult topic if you are very ca...
Suggestion by 71.182.91.35 on 2009-03-02 23:28:45
It might be easier to understand this difficult topic if you are very careful with the use of the terms "buy", "sell" and "write". For instance, the sentence: "And if an originating bank sells its loan exposure only once, and sells it to a financial firm of undoubtedly solid credit, the CDS does indeed act as a hedge for the originating bank; it transfers the company’s credit risk from the bank to the financial firm that bought its CDS." If I understand this correctly, the meaning of "sell" loan exposure here is that the bank would "buy" a CDS. Or what?
Yes the bank "selling" its loan exposure would actually mean that it is buying a CDS.
[edit] unicredit
Suggestion by 87.3.15.105 on 2009-03-02 21:13:20
unicredit
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[edit] Speculating on Defaults
Suggestion by 137.165.194.199 on 2008-11-14 17:35:48
Is it right (under the Purpose of CDS) that if I wanted to speculate on Lehman's default I would BUY a CDS to bet on this possibility? Sounds like I'm supplying insurance against that default, so I'd be out the money. I'd be in there selling Lehman CDS's.
A CDS is an insurance against default on a debt. If you are "buying" a CDS, you agree to pay the seller an upfront fee and regular premiums (monthly, quarterly, yearly etc.) for protecting you against a default on a debt. Therefore, if you wanted to speculate on Lehman bankruptcy, you would buy a CDS on Lehman bonds. You would pay the seller the premiums regularly and when Lehman would go bankrupt, the seller would pay you the full value of loan that you but the CDS against.
Walim 13:04, November 14, 2008 (PST)
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[edit] Please if you can include a history of the CDS. When was it first market...
Suggestion by 76.227.225.48 on 2008-10-12 01:38:39
Please if you can include a history of the CDS. When was it first market and by whom to whom? Thanks.
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