credit default swap
Word Rarity
Rare
Frequency: Zipf frequency 3.75 in modern English
29
Scrabble Score
17
Letters
4
Syllables
13
Unique Chars
Meaning
noun
A credit derivative contract between two counterparties, whereby the buyer (seller of risk) makes periodic payments to the seller (buyer of risk) in exchange for the right to a payoff if there is a default or other credit event in respect of a third party called reference entity.
Example Sentences
- "The cost of that funding is partially influenced by the price of an instrument known as a credit default swap — essentially, a form of insurance that one party buys to protect against the possibility that another party will default. The higher the risk of default, the higher the price of the C.D.S., and the higher the cost of funding."