Talk:Credit default swap index

Coupon?

Is there a coupon for high yield investment grade NA index?

How does it work ?

If I buy $x of a CDS, I will get back $x in case the entity defaults. But what happens when one of the company in a CDS index defaults ?

From investopedia, if a credit event occurs in one of the underlying companies, the protection is paid out via physical delivery of the debt or through a cash settlement between the two parties.

From this I understand that if I buy $x of a CDS index, I'll get back $x if one of the hundred companies in the index defaults. Which I guess is wrong. So how do these work ? --Gzorg (talk) 18:23, 4 September 2012 (UTC)

An index is just like lots of little CDS, so if you buy $125m protection on CDX, you actually have $1m protection on each of the names. In theory you have physical protection (can delivery $1m of a bond for $1m cash) but in practice everyone agrees to a cash settlement protocol override nowadays.

A lot of this page is very out of date by the way. IIC doesn't exist as a company anymore. Markit bought them at least 3 years ago.

--86.165.13.177 (talk) 09:15, 16 October 2012 (UTC)

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