What are implications of speculation using credit derivative, Finance Basics

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What are implications of speculation using credit derivative

Problem

1. Assume that you are a hedge strategist for Bank of America and consider hedging its loan portfolio against credit risk. Formulate ONE creative solution to hedge the credit risk of Bank of America. Analyse how Bank of America can be protected from credit risk based on such a strategy and possible drawbacks.

2. What are the implications of speculation using credit derivatives to the broader society and economy? Provide examples where necessary.

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Finance Basics: What are implications of speculation using credit derivative

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