If you need to estimate the fair price of a credit default swap on a financial institution, can it be done? Typical structural models tend to break down for the complex debt and asset characteristics of a financial institution. How do traders value CDSs for firms like JP Morgan?

  • $\begingroup$ It's not just the CDS. It is difficult to understand and analyze the SIFIs and all their securities because of their complexity and lack of transparency. $\endgroup$
    – Alex C
    Jan 18, 2016 at 20:57
  • $\begingroup$ so if I wanted to price a one-year CDS for a financial firm, is there no real way to go about doing this? I can get pretty accurate for standard industrial firms. $\endgroup$
    – beeba
    Jan 19, 2016 at 14:24


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