Credit swaps are:
A) an insurance product designed to protect financial institutions from customers who default on their loans.
B) securities with a maturity of less than 1 year.
C) the result of a leveling off or slowing down of price increases.
D) market trades in previously issued securities.
E) none of the above.

Question

Quizplus · Accepted Answer

Credit swaps are a type of insurance product that allows financial institutions to transfer credit risk to another party in exchange for a premium. This helps protect the financial institution from losses if a borrower defaults on their loan.

Credit Swaps Are