What is CDS and tell details of other derivatives

Question

Accepted Answer

CDS is a type of derivative used in finance. Other derivatives include options, futures, and swaps.

CDS stands for Credit Default Swap, which is a financial contract that allows investors to protect against the risk of default on a debt instrument.
Other derivatives include options, which give the holder the right to buy or sell an asset at a predetermined price; futures, which are contracts to buy or sell an asset at a future date and price; and swaps, which are agreements to exchange cash flows or assets between parties.
Derivatives are financial instruments whose value is derived from an underlying asset or benchmark, such as stocks, bonds, commodities, or interest rates.
Derivatives are used for hedging, speculation, and arbitrage purposes in financial markets.
For example, a company may use a CDS to protect against the risk of default on a bond it holds, while an investor may use options to speculate on the future price movement of a stock.

Accepted Answer

credit default swap is an over the counter agreement between two parties to transfer the credit exposed of fixed income securities

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