咁系米D non-stake holders of blue chip買了CDS，如果D blue chip公司咩事都無發生，就齋俾investment bank保費～
但如果D藍籌公司有事，investment bank still needs to compensate them?
but the thing is that there is no actual contract between these people and the blue-chip companies, so how much should the investment bank compensate them?
there are 2 contracts. One is (Lehman & CDS buyers) another is (Lehman subsidiary & minibond holders). Both triggered by the "if-blue chips fail", the then-part is "compensate CDS holders" & "charge that on minibond holder"
As a sidekick, CITIC Pacific revealed yesterday loss of 15 billions of dollars on forex leverage - half the company worth. If you had its CDS beforehand, now its chance of bankruptcy goes up, you can sell the CDS out for a good profit. So it means you make money not only when it ruins, but when the chance of ruin goes up
Like I said, I'm new to this but the fact that this is on the news everyday it got me interested. What's more interesting is through these lessons I learned a little of how closely related insurance and investment companies are interconnected. I was hoping that you could answer the question I asked earlier about why would non-stakeholders buy CDS? I mean, I could imagine people that has all the inside scoop of a company would make a fortune off CDS.
why non-stake buy CDS is simple: to bet. But not betting horse, or the next US president or other animals, it bets on the credit status of blue chips, and you earn something when mishap happens. You bet and win even if not "inside scoop". Sometimes you are lucky, or insightful, or whatever, just like when you win a lottery.
Basically, these folks insure against the collapse of some blue chips
when that doesn't happen, you don't get reimbursed. So you lose nothing even if the insurance company go bust. If you buy a non-winning Mark Six ticket, you lose nothing even if HKJC goes bust.
As I said, CDS allows payoff even if you are not stakeholder. You see, you can bet on some website on whether McCain or Obama wins, and you sure not a stakeholder.
I'm new to this, but up to lesson 3, is it correct to say that the so-called blue chip securities holders (the folks on the right of your illustration) and anyone who bought CDS are not affected b/c they're insured. What kind of people would buy these CDS if they are not stakeholders, I don'tunderstand?
咁系米D non-stake holders of blue chip買了CDS，如果D blue chip公司咩事都無發生，就齋俾investment bank保費～
但如果D藍籌公司有事，investment bank still needs to compensate them?
but the thing is that there is no actual contract between these people and the blue-chip companies, so how much should the investment bank compensate them?
仲系有少少唔明，懇請先生指教。
liveintoday 3 years ago
there are 2 contracts. One is (Lehman & CDS buyers) another is (Lehman subsidiary & minibond holders). Both triggered by the "if-blue chips fail", the then-part is "compensate CDS holders" & "charge that on minibond holder"
過澳門買番攤，開五點，殺雙賠單，殺大賠細
curioushunter 3 years ago
I like to thank you again for putting together is series. Man, you must work in the financial/investment sector or something.
doseryder 3 years ago
Thx again. No, I am not in this evil industry. I swear. Just an interested layman out there. Hoping that "the truth is out there"
curioushunter 3 years ago
As a sidekick, CITIC Pacific revealed yesterday loss of 15 billions of dollars on forex leverage - half the company worth. If you had its CDS beforehand, now its chance of bankruptcy goes up, you can sell the CDS out for a good profit. So it means you make money not only when it ruins, but when the chance of ruin goes up
curioushunter 3 years ago
Like I said, I'm new to this but the fact that this is on the news everyday it got me interested. What's more interesting is through these lessons I learned a little of how closely related insurance and investment companies are interconnected. I was hoping that you could answer the question I asked earlier about why would non-stakeholders buy CDS? I mean, I could imagine people that has all the inside scoop of a company would make a fortune off CDS.
doseryder 3 years ago
why non-stake buy CDS is simple: to bet. But not betting horse, or the next US president or other animals, it bets on the credit status of blue chips, and you earn something when mishap happens. You bet and win even if not "inside scoop". Sometimes you are lucky, or insightful, or whatever, just like when you win a lottery.
curioushunter 3 years ago
Thx for your response.
Basically, these folks insure against the collapse of some blue chips
when that doesn't happen, you don't get reimbursed. So you lose nothing even if the insurance company go bust. If you buy a non-winning Mark Six ticket, you lose nothing even if HKJC goes bust.
As I said, CDS allows payoff even if you are not stakeholder. You see, you can bet on some website on whether McCain or Obama wins, and you sure not a stakeholder.
curioushunter 3 years ago
I'm new to this, but up to lesson 3, is it correct to say that the so-called blue chip securities holders (the folks on the right of your illustration) and anyone who bought CDS are not affected b/c they're insured. What kind of people would buy these CDS if they are not stakeholders, I don'tunderstand?
doseryder 3 years ago
Thx. pls see my comments below
curioushunter 3 years ago