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explain in details, thanks! Bank HJK has written puts on Bank PQR to a hedge fund and CDS protection on Bank PQR to a manufacturer.
explain in details, thanks!
Bank HJK has written puts on Bank PQR to a hedge fund and CDS protection on Bank PQR to a manufacturer. Bank HJK and Bank PQR operate in many of the same businesses and geographical locations and their performances are highly correlated. Many in the market are concerned that rising interest rates could negatively impact the credit quality of many of Bank HJK's borrowers. From the perspective of the derivative investors, which of the following is correct with respect to their counterparty risk exposure to Bank HJK
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