credit derivative

Definition of "credit derivative"
  1. A financial contract to offset the risk of a borrower's default or bankruptcy, commonly seen in forms like credit default options, credit default swaps, and total return swaps
How to use "credit derivative" in a sentence
  1. The bank used a credit derivative to protect against the potential default of a major debtor.
  2. Credit derivative instruments like credit default swaps are used by financial institutions to manage risks.
  3. In order to secure their investments, fund managers often turn to credit derivatives.

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