Car insurance makes sense. If I drive or own a car, I better have some way to pay for repairs and healthcare if I fuck up. And it makes sense that the insurance company better be tightly regulatedâ€"forced to keep enough liquid assets around to pay out claims. If the insurance company failed to pay up, it would be a nightmare for everyone. Credit Default Swaps (CDS) started out as insurance for bonds. For a percent or two a year of the face value of the bond, you received a contract to pay the
Saturday, 25 October 2008
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