Important Points for IC 99 - Asset Management Exam
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Credit derivatives are financial contracts that provide insurance against credit-related losses. These contracts give investors, and banks new techniques for managing credit risk that complement the loan and asset securitisation methods. Classification of credit derivatives include : Credit default swaps (CDS), Credit link notes (CLS)
All debt securities that are awarded a credit rating of BBB or above are adjudged investment grade.
Futures are under regulations whereas forwards are unregulated.
Yield to maturity is the current yield and the capital gain or loss you can expect if you hold the bond to maturity.
The thumb rule is that investors should not buy long term bonds when interest rates are low or rising.
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