Explain the term copula in current financial crisis
Explain the term copula in current financial crisis.
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The copula approach permits one to join together (hence the word ‘copula’) default models for individual companies within isolation to make a model for the probabilities of their joint default. The concept was adopted universally as a practical solution to a complicated problem. Though, with the recent financial crisis the concept has come in for lots of criticism.
Good fellow national bank decided to compete with a savings and loan by offering 30 year fixed rate mortgage loans at 8% annual interest. It plans to obtain the money got the loans by selling one year 6% CD to it's depositors. During first year of operation, good fellows sold it's depositors 1,000,0
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