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How do I track a credit default swap?

How do I track a credit default swap?

Check out Datastream Advance, available in Lippincott Library.

  1. In Category: choose Bond Indices & cds.
  2. Click on the Red Arrow.
  3. For a specific company, enter the Name or DS Mnemonic.
  4. In Type: click on Credit Default Swap.
  5. Click Search.
  6. You will retrieve a CDS list for that company.
  7. Click Report to retrieve data.

How did people make money on credit default swaps?

Credit default swaps (CDS) are just insurance on a loan. So when you buy a CDS, you’re betting against a loan. So if the loan defaults, you stand to make money. And if there’s no default, you just wind up coughing up premium after premium, paying for car insurance on your good driver who never gets in an accident.

How were credit-default swaps responsible for the global financial crisis?

Companies that traded in swaps were battered during the financial crisis. Since the market was unregulated, banks used swaps to insure complex financial products. Investors were no longer interested in buying swaps and banks began holding more capital and becoming risk-averse in granting loans.

Who sold credit default swaps in 2007?

Lehman Brothers found itself at the center of this crisis. The firm owed $600 billion in debt. Of that, $400 billion was “covered” by credit default swaps. 2 Some of the companies that sold the swaps were American International Group (AIG), Pacific Investment Management Company, and the Citadel hedge fund.

How were credit default swaps responsible for the global financial crisis?

Why are credit default swaps necessary?

What are credit default swaps used for? Credit default swaps are primarily used for two main reasons: hedging risk and speculation. To hedge risk, investors buy credit default swaps to add a layer of insurance to protect a bond, such as a mortgage-backed security, from defaulting on its payments.

Did credit default swaps cause financial crisis?

The author reviews the credit default swap market and investigates its role in the financial crisis. He concludes that the financial crisis was not caused by credit default swaps directly but driven by falling real estate prices and financial institutions operating with too much leverage.