The CDS Market, business and finance homework help

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Question Description

1. In CDS contracts, what kinds of risks are CDS protection buyers exposed to? And what kinds of risks are CDS protection sellers exposed to?

2. The CDS market on corporate bonds is generally more liquid than the corporate bond market. Why? List at least four reasons.

For each question, please write at least one page, double space. Thank you.

Tutor Answer

NicholasI
School: Cornell University

Hi, kindly find attached complete work.

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The CDS Market
1.

In CDS contracts, what kinds of risks are CDS protection buyers exposed to? And

what kinds of risks are CDS protection sellers exposed to?
CDS is specific kind of swap which is intended to handover credit experience of
permanent income between two or even more parties. In CDS the purchaser of the security
makes payment to the vendor of the swap up to the date of maturity of a particular contract.
It is CDS protection buyer who bears the biggest threat of swap since the key risk of CDSs is that
seller of a protection is not in a position to reimbursement in the event of a credit that CDS
contract covers. CDS is made to safeguar...

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Anonymous
Excellent job

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