Re: Question: Financial Engineers
Means we write a contract which makes you pay me $100 if ratings go down and I pay you $100 if ratings do not go down. You can sell this bet to CB. This contract should be transferable and later transactions would be designed by financial engineers, specially regarding how these instruments would be priced.
Just like banks sold rights to receive housing mortgages to other banks and those banks bundled the those mortgages together and sold to investment banks as ‘mortgage backed securities’. Those investment banks traded such securities making money for themselves, eventually taking down the economy 