Overview

Credit derivatives allow one party to transfer an asset's credit risk to another party without transferring ownership of the underlying asset. This tutorial outlines the basics of credit derivatives and examines the structure of a basic credit derivatives trade, known as a credit default swap (CDS). Other topics covered include the development of the market pre- and post-financial crisis, and the risks associated with undertaking credit derivatives transactions.

Objective

On completion of this tutorial, you will be able to:
- Recognize credit as a separate asset class that can be traded
- Identify the basic structure of a credit derivative (credit default swap)
- Recall the evolution and development of the credit derivatives market

Content

Topic 1: Credit as an Asset Class
Topic 2: Credit Derivative Structures
Topic 3: Market Development