The __________ is designed to shift the risk of default to a third party.

Question

Quizplus · Accepted Answer

A credit default swap is a contract designed to shift the risk of default from one party, typically the holder of a security, to a third party, typically an insurance company or other financial institution. The third party agrees to pay the holder of the security a specified amount in the event of a default by the issuer of the security. This allows the holder of the security to hedge against the risk of default and potentially earn a higher return on their investment.

The __________ Is Designed to Shift the Risk of Default