GO
Loading...

Credit Default Swaps: CNBC Explains

Credit default swaps, also known as CDS, gained notoriety in the 2008 financial crisis when firms such as AIG found themselves overexposed to credit risks. In simple terms, credit default swaps act as insurance against default, but these financial instruments are actually used in a number of complex ways. How are credit default swaps employed, and what is the rationale for these securities? Salman Khan of the Khan Academy explains.

From the first video, you’ll understand:

  • The rationale behind credit default swaps
  • How CDS are used as insurance

From the second video, you’ll understand:

  • Several ways credit default swaps are used in practice
  • The various players who transact CDS
  • How CDS can be understood as “side bets”

Latest Special Reports

  • Advisor-centric content with guest columns covering practice management, investment strategies and marketing/social media.

  • File photo: Participants at a hacking conference in Germany

    A series of high profile cyber attacks has created huge economic opportunity as businesses look to fend off future attacks.

  • Whether you're young and just getting started investing or moving closer to retirement, factoring in age will keep you ahead of the game.

Central Banking Explained

Corporate Accounting Explained