Learning Curve

Leveraged super senior transactions provide protection on a super senior tranche.

Strong demand for leveraged loans in Europe has left primary and secondary spreads low.

Risk management plays a crucial role in upholding the stability of the financial system, and hence the accuracy with which risk is managed.

Though credit-default swap index options have been around for a few years, investor interest, liquidity and volumes have increased significantly only this year.

A negative basis trade is a credit derivative trade in which the buyer of a debt instrument purchases credit protection in the form of a credit-default swap.

Consider the following: a Bermuda limited-partnership hedge fund and an investment bank are parties to an interest-rate swap under a master agreement.

Consider Beta versus VHS in video recording, or GSM versus CDMA and TDMA in cellular telephony.

The U.S. Inflation swaps market is relatively young, having only begun to trade in meaningful amounts in late 2003.

Last week's Learning Curve discussed the legal basis for insider trading claims with respect to credit-default swaps and the safe harbor for "reasonable policies and procedures."

As financial institutions are increasingly using credit derivatives to take customized credit positions and manage exposure, questions have been raised as to possible misuse of material nonpublic information in connection with such transactions.

Conditional variance swaps are similar to standard variance swaps but variance exposure is limited to a predefined range of underlying levels.

China's old bankruptcy law, the 1986 Enterprise Insolvency Law (Trial Implementation), was promulgated for trial implementation in 1986 following the start of China's economic reform in 1978.