Date: June 21st, 2007

Risk moonshine: credit derivatives, Part 2

21 June, 2007 (10:03) | Capital markets, Primer Posts | 2 comments

[Continued from yesterday’s Part 1.]

Yesterday we saw that every financial transaction creates two new sets of risks, one for each party: Borrowers can lose their collateral, and lenders can lose their principal. Indeed, typically when one loses, the other loses also, so while they have opposed economic (every buck goes to one of […]