Formulate a creative solution to hedge the credit risk

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Assume that you are a hedge fund manager and have invested in $1,000,000 worth of bonds issued by China Evergrande Group two years ago and have decided to hedge credit risk of these bonds at the time, predicting a deterioration of credit risk. Formulate a creative solution to hedge the credit risk of this reference entity. Analyse how you can be protected from credit risk based on such a strategy and possible drawbacks.

Reference no: EM133059904

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