What are Credit Default Swaps?

Stephen provides and introduction to Credit Default Swaps and their use as a hedge against default risk, alongside as a tool for speculation.

- Definition of Credit Default Swaps (00:00)
- How simple Credit Default Swaps work (00:20)
- Further details and Credit Default Swap definition (00:46)
- Credit Default Swaps as a tool for speculation (01:39)
- Naked Credit Default Swaps (02:18)
- The risks associated with Credit Default Swaps in the context of the Great Financial Crisis (02:39)

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[AmplifyME-Hub]

Given all the talk about Credit Suisse recently we thought it would be wise to just step back for a moment and explain exactly what a Credit Default Swap is! Hope it helps and remember to subscribe to the daily newsletter for more

[alexanderovie]

This explanation is absolutely brilliant and gives a great simply understanding. Great foundation to enable me to study further if I so wish!

Thank you

[Alan__Chiu]

One of the most famous CDS is by Micheal Burry

[markhjoy]

Wait…can you explain it to me like I’m 5 years old?

[charlieblack]

So In other words, Lehman Brothers needed to buy a credit default swaps from another firm to cover their credit default swaps, and the crisis never would’ve happened?!? Problem solved.