Books on credit markets

Discussion in 'Financial Futures' started by TraDaToR, Nov 4, 2011.

  1. TraDaToR



    I have a really limited knowledge in credit markets and financial futures. What are the good books to learn the basics of bonds, repos and other credit derivatives?

    I have the Hull but I was looking for something less academic.

    Thanks a lot.:)
  2. Stigum's Money Market, 4E
  3. Short summary on derivatives.

    "You have $90 worth of real gold and $10 of fools gold = $100. If you divide this in half each half is worth $50. This is the concept. The derivative dealers would then take this $100 contract and put it into a trust and divide it up into $1 units and sell these 100 unit trusts to pension funds or municipalties, etc for $100 (plus fees, but we'll forget about that for this exercise).

    Next what would happen is the the pension fund or country or whoever bought that 100 unit trust would hold it for a week or so and instruct the bank to sell half (50 units). The contract is set up so if the pension fund sold any portion of their trust the bank would liquidate the most valuable part of the contract which is the real gold. Well the bank would sell 50 units of the trust which had a value of $50 but since the bank had to sell the most valuable portion which is the real gold (value $90) the sale should show a profit of $40. The bank would return to the pension fund $90. This would make the remain 50 units (whose value is really $10) remain on the books @ $50.

    So the pension fund books a profit of $40 instant cash profit and never sells the remaining 50 units which is an unrealized loss but not accounted and still valued at $50."
  4. TraDaToR


    Thanks, just ordered it.