Among the most popular of credit derivatives contracts are credit swaps in which two or more investors in risky loans and securities agree to exchange at least a portion of their expected payments due from the borrowers.

Question

Quizplus · Accepted Answer

Credit swaps, specifically credit default swaps (CDS), are indeed among the most popular credit derivatives. They involve agreements between two parties to exchange the risk of default on loans, where one party receives premium payments in exchange for agreeing to cover losses if the borrower defaults, effectively allowing investors to manage or hedge against credit risk.

Among the Most Popular of Credit Derivatives Contracts Are Credit