A pure credit swap is similar to buying credit insurance.

Name: A pure credit swap is similar to buying credit insurance.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Both involve one party protecting themselves against the credit risk of another party. In a credit swap, one party agrees to take on the credit risk of a bond or loan in exchange for receiving a fee, while in credit insurance, the insurer agrees to pay out if the credit event (such as default) occurs.

A Pure Credit Swap Is Similar to Buying Credit Insurance