Completley confused by the way Schweser has written this reading… any comments by ones who have read the CFAI books on this reading? what sticks out as important?
Do you mean credit default swaps? I don’t have my schweser or CFAI stuff in front of me
Yes…that is exactly what I am talking about… Reading 64 SS 17
I read the CFAI text on that, and the schweser text has the meat of the information needed. I think its the main concepts of the CDS and when you would use a CDS. I think the most important concet to note is that it is not sensitive interest rate risk. It is a pure credit insturment that will change in value as the underlying credit of the reference bond increases or decreases.
In brief it’s how they are used in the market and some of the strategies behind the types only a few pages in the CFAI text, worth a read