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A comment on Credit Suisse finds ‘material weakness’ in reporting, scraps exec bonuses. Parent comment

Re:Credit Suisse finds ‘material weakness’ in reporting, scr... by oakwhiz on Tuesday March 14, 2023 @12:45PM (#35154380)
Sounds like the financial version of dark matter
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Re:Credit Suisse finds ‘material weakness’ in reporting, scr... by lordnacho on Tuesday March 14, 2023 @01:43PM (#35155376)
A fudge factor that makes your models agree with observation? Yeah, pretty much. I was never an expert in CDS so I always wondered if other people had better ways of dealing with it. But nobody I've come across has ever offered anything other than 40%.
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Re:Credit Suisse finds ‘material weakness’ in reporting, scr... by WastingMyTime89 on Tuesday March 14, 2023 @03:00PM (#35156756)
It’s not necessarily.

A peculiarity of finance as a field of study is that a lot of the people studying finance only care about direct applications and a lot of the people teaching finance had this mindset when they learnt.

It’s easy to end up with some poorly taught material. If you carefully looked at the model which gave rise to the equation you are considering, there probably is a very tangible meaning to the figure everyone is ball parking.

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Re:Credit Suisse finds ‘material weakness’ in reporting, scr... by itronitron on Tuesday March 14, 2023 @04:20PM (#35157819)
>> there probably is a very tangible meaning to the figure everyone is ball parking

40 is awfully close to 42

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Re:Credit Suisse finds ‘material weakness’ in reporting, scr... by curiousgal on Tuesday March 14, 2023 @04:44PM (#35158228)
Not really. Quants modelled stochastic recovery rates and they saw that it doesn't really add much. Fixed recovery rates work just fine.
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