Category Archives: Digests

Renegotiation Frictions and Financial Distress Resolution: Evidence from CDS Spreads

Renegotiation Frictions and Financial Distress Resolution: Evidence from CDS Spreads
Murillo Campello; Tomislav Ladika; Rafael Matta
Review of Finance, Volume 23, Issue 3, May 2019, Pages 513–556, https://doi.org/10.1093/rof/rfy021

Financially distressed firms often attempt to renegotiate with creditors outside of bankruptcy court, to forgo the deadweight costs of drawn-out legal battles.… Read more...

Downside Market Risk of Carry Trades

Downside Market Risk of Carry Trades
Victoria Dobrynskaya
Review of Finance, Volume 18, Issue 5, 1 August 2014, Pages 1885–1913, https://doi.org/10.1093/rof/rfu004

According to uncovered interest parity, free capital mobility ensures that investments in different currencies with different levels of local interest rates do not consistently generate excess returns because a positive interest rate differential should be compensated by the expected exchange rate depreciation of the target currency.… Read more...