Credit Derivatives: A Primer on Credit Risk, Modeling, and Instruments

Product Description

Now, theres a completely up-to-date guide on credit derivatives thats ideal for all working financial professionals and students entering the field. Credit Derivatives, Second Edition has been fully updated to explain todays credit risk markets clearly and simply, in language any practitioner or advanced business student can understand. The authors begin by explaining the underlying principles surrounding credit risk. Next, they systematically present today's leading methods and instruments for managing it. The authors introduce total return swaps, credit spread options, credit linked notes, and other instruments, demonstrating how each of them can be used to isolate risk and sell it to someone willing to accept it. The authors, including leading practitioner George Chacko, have updated all content throughout to reflect todays instruments, rules, and practices. 
Every company faces credit risk. Credit derivatives are among the most powerful tools available for managing it. Once restricted to the financial industry, they are now widely used by businesses of all kindsand all financial professionals need to understand them. Credit Derivatives, Revised Edition, explains these tools simply, clearly, and rigorously: what they do, how they work, and how to use them in todays applications.
 
The authors first show how credit risk can be measured and valued. They explain key ideas, such as recovery rates and credit spreads, and show how derivatives transfer credit risk to external investors. Next, they systematically demonstrate how credit risk models can describe and predict credit risk events. They cover structural models, including Merton and Black and Cox; empirical models, such as the Z-score model; and reduced-form models, such as Jarrow-Turnbull. The authors also present detailed explanations of two widely used instruments: credit default swaps (CDSs) and collateralized debt obligations (CDOs).
 
Finally, building on what youve learned, the authors offer a brand-new primer on todays applications for financial instruments with embedded credit risk.
 
FINANCIAL STATEMENT ANALYSIS
Perform preliminary financial analysis on any potential project
 
UNDERSTAND, MEASURE, AND ASSESS CREDIT RISK
Master core concepts, from credit spreads to default probabilities
 
MASTER POWERFUL CREDIT RISK MODELING APPROACHES
Learn structural, empirical, and reduced-form credit risk modeling
 
GAIN DEEP INSIGHT INTO TODAYS INSTRUMENTS AND APPLICATIONS
Understand CDSs, CDOs, and how credit-sensitive products are now used
 
FOR EVERY FINANCIAL PRACTITIONER: BUY-SIDE AND SELL-SIDE
For CFOs, treasurers, and other practitionerseverywhere from pension funds to commercial corporations

From the Back Cover

TODAYS COMPLETE GUIDE TO CREDIT RISK MARKETS AND APPLICATIONS FOR EVERY FINANCIAL PROFESSIONAL Simple, yet rigorous explanations: no credit derivatives experience necessary Covers principles, models, techniques, and widely used credit instruments, including CDSs and CDOs Now includes detailed coverage of solving business problems with credit-sensitive instruments
Todays credit risk market is immenseand immensely important, attracting everyone from hedge funds to banks and insurers. Today, corporate finance professionals must understand credit risk, both to manage risk in their own organizations and to consult with their clients. Most books in the field, however, are either too academic, or assume extensive experience. Credit Derivatives, Revised Edition, fills the gap, explaining the credit risk market clearly and simply, in language any working financial professional can understand.
 
The authors first explain the underlying principles of credit, and the various risks associated with extending loans and other types of credit. Next, they systematically present todays leading methods and instruments for managing credit risk. Youll learn how models can be used to gauge credit risk, and how credit