GAO 07 716 Credit Derivatives Gao Form

Instructions and help about GAO 07 716 Credit Derivatives Gao

hello and welcome to this introduction to credit derivatives brought to you by passing score where you can get more help on your exam prep at passing score finance calm in this video we'll be going over the definition and basic structure of credit derivatives a quick example and then some of the risks that are involved first let's start with what is a credit derivative it's an instrument that allows you to separate the credit or default risk from an asset or pool of debt instruments and trade them to another party now we're just separating the credit or default risk none of the other features of the bonds are part of the credit derivative these can then be bought and sold between private parties or through the open market now why would you want to do something like this well for hedging purposes if you're managing a portfolio that involves credit risk you might want to actively manage the credit exposure in your positions and you can increase or decrease the credit risk by using credit