Credit default swaps are used by an investor to shift credit exposure to a credit protection seller.

Question

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Credit default swaps (CDS) are financial derivative contracts that allow an investor to swap or offset their credit risk with that of another party. Through a CDS, the buyer of the swap makes payments to the seller in exchange for the right to a payoff if a certain credit event, such as default, occurs, effectively shifting credit exposure to the seller of the protection.

Credit Default Swaps Are Used by an Investor to Shift