Can you explain FX Option and Credit Default Swap

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FX Option is a financial derivative that gives the holder the right but not the obligation to exchange one currency for another at a predetermined exchange rate. Credit Default Swap is a financial contract that allows the buyer to transfer the credit risk of a bond or loan to a seller.

FX Option is used to hedge against currency risk in international trade
Credit Default Swap is used to protect against the risk of default on a bond or loan
FX Option can be either a call option or a put option
Credit Default Swap involves the payment of periodic premiums by the buyer to the seller
FX Option can be settled either in cash or by physical delivery of the underlying currencies
Credit Default Swap can be used to speculate on the creditworthiness of a company or country

Can you explain FX Option and Credit Default Swap

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