Credit Derivatives Revolutionize Financial Markets with Innovative Risk Management Strategies
The article discusses different types of credit derivatives, with credit default swaps being the most common. In a credit default swap, one party pays a fee to another in exchange for protection against a credit event by a specific entity. This payment is made over multiple dates rather than all at once. Other types of credit derivatives include index swaps, basket default swaps, asset swaps, and total return swaps.