Finance ABC

Welcome back to another episode of Finance ABC. I’m your host, Emma Lai, and today we’re diving into one of the more complex but fascinating corners of the finance world: credit derivatives, specifically focusing on credit default swaps, or CDS for short. Credit default swaps are a type of financial instrument that allows investors to manage risk in a unique way, protecting themselves or speculating on the creditworthiness of a borrower. They’re not exactly household names, but these derivatives play a big role in the financial markets, especially when it comes to managing credit risk.