Until now, it hasn’t been entirely clear how much damage will result from the Lehman bankruptcy. An auction taking place today will be an important step in assessing which financial institutions stand to take a hit. Today’s auction involves a type of security that many people know little about or have only heard of recently: credit default swaps.
What are credit default swaps?
Generally, an “investment swap” involves trading one security for another. However, another kind of investment swap is a contract: one in which two parties agree to enter into transactions with each other on the basis of changes …Read More