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Credit Derivative |
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Credit Derivative What Does Credit Derivative Mean? Privately held negotiable bilateral contracts that enable their users to manage their exposure to credit risk. Credit derivatives are financial assets like forward contracts, swaps, and options for which the price is driven by the credit risk of economic agents (private investors or governments). Investopedia explains Credit Derivative As an example, a bank concerned that one of its customers may not be able to repay a loan can protect itself against loss from default by transferring the credit risk to another party while keeping the loan on its books. Related Terms: How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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Risk management related credit derivative products such as Credit Default Swaps, albeit good hedges for risk, are truly double edged swords, if coupled with wanton speculation and overleveraging. Credit derivatives are financial assets like forward contracts, swaps, and options for which the price is driven by the credit risk of economic agents (private Credit derivatives are financial assets like forward contracts, swaps, and options for which the price is driven by the credit risk of economic agents (private |
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