Donald Richards
Pennsylvania State University
Scientific, Seminar
Applied Mathematics Seminar: Constant Proportion Debt Obligations, Zeno's Paradox, and the Spectacular Financial Crisis of 2008
We analyze a coin-tossing model used to justify the sale of constant proportion debt obligations (CPDOs) and prove that it was impossible for CPDOs to achieve the Cash-In Event. In the best-case scenario in which the coin is two-headed, we show that...