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Credit default swap. A credit default swap ( CDS) is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt default (by the debtor) or other credit event. [1] That is, the seller of the CDS insures the buyer against some reference asset defaulting.
A credit default swap index is a credit derivative used to hedge credit risk or to take a position on a basket of credit entities. Unlike a credit default swap, which is an over the counter credit derivative, a credit default swap index is a completely standardized credit security and may therefore be more liquid and trade at a smaller bid–offer spread.
Sustainable finance. v. t. e. In finance, a swap is an agreement between two counterparties to exchange financial instruments, cashflows, or payments for a certain time. The instruments can be almost anything but most swaps involve cash based on a notional principal amount. [1] [2]
A credit default swap is a type of derivative, one used to protect against the default of a "debt instrument," i.e., a bond or security. Just as with an insurance policy that insures you against a ...
Probability of default ( PD) is a financial term describing the likelihood of a default over a particular time horizon. It provides an estimate of the likelihood that a borrower will be unable to meet its debt obligations. [1] [2] PD is used in a variety of credit analyses and risk management frameworks. Under Basel II, it is a key parameter ...
Credit default option. In finance, a default option, credit default swaption or credit default option is an option to buy protection (payer option) or sell protection (receiver option) as a credit default swap on a specific reference credit with a specific maturity. The option is usually European, exercisable only at one date in the future at a ...
A constant maturity credit default swap ( CMCDS) is a type of credit derivative product, similar to a standard credit default swap (CDS). [1] Addressing CMCDS typically requires prior understanding of credit default swaps. In a CMCDS the protection buyer makes periodic payments to the protection seller (these payments constitute the premium leg ...
In financial accounting, an asset swap is an exchange of tangible assets for intangible assets or vice versa. Since it is a swap of assets, the procedure takes place on the active side of the balance sheet and has no impact on the latter in regard to volume. As an example, a company may sell equity and receive the value in cash, thus increasing ...