Credit Default Swap (CDS) (Investments & Retirement) - Definition, Examples, Advice | Bolder Money

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Definition

A financial derivative that acts like insurance against the default of a borrower, transferring risk between parties.

What to consider

Know that CDS works like insurance against loan default.
Consider the complexities and risks involved with derivatives.
Review market conditions before engaging in such transactions.

Real world scenarios

During the financial crisis, investors like Jason used credit default swaps (CDS) to hedge against the risk of default by companies.

Related terms

Investments & Retirement

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