A financial product linked to a loan or an obligation. They are used to transfer the risk linked to a financial product while keeping, and insuring, the originating asset
Asset
Something belonging to an individual or a business that has value or the power to earn money (FT). The opposite of assets are liabilities, that is the part of the balance sheet reflecting a company’s resources (the capital contributed by the partners, provisions for contingencies and charges, as well as the outstanding debts).
. One of the most common forms is the Credit Default Swap (CDS
CDS
Credit Default Swaps
Credit Default Swaps are an insurance that a financial company may purchase to protect itself against non payments.
).