Credit Derivative

What Does It Mean?
What Does Credit Derivative Mean?
Privately held negotiable bilateral contracts that allow 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 Says
Investopedia explains Credit Derivative
For example, a bank concerned that one of its customers may not be able to repay a loan can protect itself against loss by transferring the credit risk to another party while keeping the loan on its books.
Related Links
Rate this Term: Your Rating:    Overall Rating: Vote Now!
Sponsored Links
MARKETPLACE
The Investopedia Guide to Wall Speak
TRADING CENTER
CURRENT HIGH YIELD SAVINGS RATES
Type
Overnight avgs
Rate data provided by
Bankrate.com
add investopedia foot
www.investopedia.com