If one party pays a fixed fee on a regular basis in return for a contingent payment that is triggered by a downgrading of a firm's credit rating,that is called a
A)credit option.
B)credit swap.
C)credit-linked note.
D)credit default swap.

Question

Quizplus · Accepted Answer

A credit default swap (CDS) is a financial derivative where one party pays a regular fixed fee in exchange for a contingent payment triggered by a credit event, such as a downgrade in a firm's credit rating.

If One Party Pays a Fixed Fee on a Regular