FRM II-CCDS

anbu.edu
Finance Junkie
Posts: 205
Joined: Mon Feb 04, 2013 3:35 pm

FRM II-CCDS

Postby anbu.edu » Thu Nov 06, 2014 7:08 am

can anybody explain CCDS to me... to my understanding its like CDS but it cover large type of derivative and it replaces any one which is defaulf..please correct me if i am wrong

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

FRM II-CCDS

Postby edupristine » Thu Nov 06, 2014 10:20 am

A CCDS is a credit default swap (CDS) in which the notional and the amount of protection are not fixed, but rather linked to a benchmark. Here, the protection amount is based on the positive present value of a reference transaction (an OTC derivatives instrument).

This type of CDSs can be viewed as an OTC derivative in which is embedded a knock-in option upon the default of the reference transaction. In a regular CDS, protection payment is triggered by a credit event, such as non-performance, i.e., failure by a reference entity to honor obligations.

In a contingent credit default swap, the trigger is contingent on the occurrence of both a credit event and some specified event such as the level of a particular market or sector variable.


Return to “FRM Part II”



cron

Disclaimer

Global Association of Risk Professionals, Inc. (GARP®) does not endorse, promote, review or warrant the accuracy of the products or services offered by EduPristine for FRM® related information, nor does it endorse any pass rates claimed by the provider. Further, GARP® is not responsible for any fees or costs paid by the user to EduPristine nor is GARP® responsible for any fees or costs of any person or entity providing any services to EduPristine Study Program. FRM®, GARP® and Global Association of Risk Professionals®, are trademarks owned by the Global Association of Risk Professionals, Inc

CFA Institute does not endorse, promote, or warrant the accuracy or quality of the products or services offered by EduPristine. CFA Institute, CFA®, Claritas® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

Utmost care has been taken to ensure that there is no copyright violation or infringement in any of our content. Still, in case you feel that there is any copyright violation of any kind please send a mail to abuse@edupristine.com and we will rectify it.