1 AN ANALYSIS OF CREDIT DEFAULT SWAPS: 2002-2009 PERIOD Ali M. Parhizgari Department of Finance and Real Estate Florida International University Miami Florida, 33199, USA parhiz@fiu.edu Chaiyuth Padungsaksawasdi Department of Finance and Real Estate Florida International University Miami Florida, 33199, USA cpadu001@fiu.edu ABSTRACT We analyze whether the CDS market released any abnormal signals that could have been discerned prior to the 1988 subprime chaos that brought about the global financial crisis. In particular, an examination of the conformity of this market with the standard day-to-day market factors is our aim. Our results indicate that the CDS market was linked to a number of other financial entities, that it affected and was affected by a select major financial variables, and that it was functioning normally in the sense of being similar to other financial markets. However, while the market was riding on the interplay of its forces, very regrettably the underlying trust and assumptions were never questioned.