In a credit default swap (CDS), the borrower pays a fee to the swap provider and in return receives compensation for any loss on the loan covered by the swap.

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In a credit default swap, the buyer of the CDS pays a fee to the swap provider (seller) and receives compensation if the borrower defaults on the loan. The borrower is not directly involved in the CDS transaction.

In a Credit Default Swap (CDS), the Borrower Pays a Fee