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3:20
Khan Academy
Sal Khan
Credit default swaps (CDS) intro
Pension funds need safe investments. Company A offers 10% interest, but it's rated BB. AIG, rated AA, offers a credit default swap (CDS) as insurance. Pension fund gets 9% interest and feels safer. CDSs aren't regulated like insurance, so AIG doesn't set aside money for potential defaults.
Jul 20, 2011
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