Abstract
The promise of high profits uncorrelated to the stock market draws prospective investors to life settlements. Spared perhaps from correlation risk, investors face other obvious and not-so-obvious risks including two types of longevity risk. The cost to hedge longevity risk has traditionally been exorbitant because those who take the other side are not themselves hedging. Newly engineered longevity swaps may provide lower cost hedging primarily because they are designed to place together two parties with opposite hedging needs.
TOPICS: Information providers/credit ratings, credit risk management, MBS and residential mortgage loans
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