Credit Derivatives Essay Example | Topics and Well Written Essays - 1000 words

Credit Derivatives - Essay Example (Moorad Choudhry, 2004) Theoretically, credit derivatives make a new class of assets made to trade default risk on a range of maturity without a collateral constraint. However, the potential efficiency benefits of credit derivatives are being reduced by lack of liquidity globally, the repo market use in hedging and the lack of secondary markets. The pricing of these instruments is affected by factors such as the option to deliver the cheapest bond and liquidity. In addition, emanating from lack of arbitrage, the rate of repo and bond over libor spread can be utilizedd to price the default swap. (Romain G Ranciere, 2002) In relatively short time, the credit derivative markets have grown, becoming a key component of capital markets and embracing a wide range of participants. They form an important part of the corporate bond market used for hedging and speculative purposes. Credit derivatives are ‘over the counter’ (OTC) instruments and therefore, very flexible; they can be specifically made to suit individual needs and can be used for a wide range of applications. These OTC instruments have a number of advantages such as their ability to be tailor made to suit specific requirements, their ability to isolate the underlying loan or bond from certain aspects of credit risk and their ability to be used by the banks in business restructuring as they allow these banks to parcel out credit risk while retrieving assets on the balance sheet. The three most common credit derivative instruments are credit default swaps, total return swaps, and credit-linked notes. The credit derivatives market share in the corporate sector is estimated at 80 percent and is essentially made up of high yield fixed income market in developed economies. Ironically, the credit derivatives upon upcoming sovereign bonds form the remaining 20 percent. (Moorad choudhry, 2004) BRIEF HISTORY OF CREDIT DERIVATIVES. Although since 1975 credit instruments were operating, it is in the year 19 96 that credit derivative markets really started. This came from financial institutions’ held concern about credit risk exposure regarding them. At that moment, the credit derivatives markets started being viewed as a compliment to the loan securitization markets. Quickly, the credit derivatives’ markets developed solely and simply became an important place to hedge as well as take credit risks on sovereign and corporate debts alike. During the crisis in Asia, from july of 1997, the emerging credit markets made a break in forward surge. The markets were slowed down by the absence of standardized documentation until 1999, when the International Swap and Derivatives Association (SDA) credit derivatives definitions were published, though. In year 1998, during which year the Russian nation bond defaults started. Credit derivatives markets were again triggered although some legal documentation problems were highlighted. However, the 1999 ISDA definitions reduced the causes of legal disputes. It is during that period of time that the year 1999 Ecuador-quasi voluntary bond exchange was put under recognition as a credit event. It is also at some time later that the investment markets agreed that the 2000 Argentina debt swap did not constitute a credit event. The Argentina turmoil of 2001

Cochlear Implant Essay Example | Topics and Well Written Essays - 1000 words

Cochlear Implant - Essay Example Studies show that as of April 2009, around 188,000 people including children across the world have received the implant (NIDCD 2010).That gives a very optimistic picture that the implants have been accepted and people have benefitted from it. The success rate of these implant strategy is because of a proper management of psychological problems, apt education on its advantages and disadvantages and timely intervention. Advancements in technology have also played a major role. An example of it could be the improvements shown in the circuit development reduction of noise factors and adaptable fitting hearings.There are numerous factors that affect the success of an implant. Improved circuits have played their part in advancing the signal processing methods but the continuous increment in the levels of hearing impairment and recruitment for loudness disrupting features of safe listening, the target of achieving 100% success has a long way to go. In addition to this, people who go for hea ring aids cannot be said to be completely clear of any hearing loss. It is because there are chances for pathology influences to affect the transduction processes through which these hearing aids transmit sound in the ear. Hearing does not start immediately after the implant. It takes about 1-4 weeks for the brain to register new sounds and generally turn the implant into an active mode. Primary factors that accentuate the success of an implant are the recipient’s immediate reaction and the period since when loss of hearing was detected.