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Credit Derivative |
Also found in: Wikipedia | 0.42 sec. |
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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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In recent years risk management products such as credit derivatives have evolved into vehicles of speculation, instruments used by financial firms and institutions to make speculative and sometimes irresponsible bets on market movements. 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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