Credit Derivatives Risk Management

Abstract:     
This paper investigates one main of credit derivatives instruments, known as credit default swaps. CDS is very popular instruments in the credit market which is trading by governments, firms, investors. Credit default swaps, is contracted between two parties for a one party payment small amount to other party as periodic fee, instead the other party repayment to the first party when default occurs. This tool is to protect of investment against of credit risk with using is hedging system and transfer risk to another party. We focus on functioning of CDS in the space of real market, mechanics of CDS, purpose using of CDS and effects of CDS on governments and eventually we used numerical example.

Number of Pages in PDF File: 9

Keywords: credit derivatives, credit default swap, hedging system, transfer risk

JEL Classification: A10, C10, C19

working papers series