Notices

Credit derivative

From Traderpedia

(Difference between revisions)

Arbitrageur (Talk | contribs)

Next diff →

Current revision

Definition:
A credit derivative is a contract, future or option, to transfer the risk of the total return on a credit asset falling below an agreed level


A credit derivative is a contract (derivative) to transfer the risk of the total return on a credit asset falling below an agreed level, without transfer of the underlying asset. This is usually achieved by transferring risk on a credit reference asset. Early forms of credit derivative were financial guarantees. Some common forms of credit derivatives are credit default swap, total return swap and credit linked note.

Retrieved from "http://www.trade2win.com/traderpedia/Credit_derivative"