credit default swap

credit default swap definition - finance
A financial trans-action in which the holder of a debt instrument pays a premium for protection from a loss in the case of default. This may be accomplished by purchasing an option or credit insurance, rather than a true swap. All of the credit risk can be transferred by using a total return swap.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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