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Practical Methods of Financial Engineering and Risk Management
book

Practical Methods of Financial Engineering and Risk Management

by Rupak Chatterjee
August 2014
Intermediate to advanced content levelIntermediate to advanced
388 pages
9h 44m
English
Apress
Content preview from Practical Methods of Financial Engineering and Risk Management

CHAPTER 6

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Introduction to Credit Derivatives

The risk of a counterparty of a financial contract failing to live up to their obligations is real and can have far-reaching consequences. The financial system is predicated on the fact that when one buys an option or bond or enters into a swap with a counterparty, the expectation is that they will honor all contingent or promised cash flows from the financial instruments in question. The failure to meet a payment of any sort is considered a credit event and is called a default. Defaults may occur when companies declare bankruptcy and can no longer meet their debt obligations in terms of interest and ...

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Publisher Resources

ISBN: 9781430261346Purchase book