of Credit Derivatives
Derivatives: Market Info and awareness
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derivative: A credit derivative where the protection
buyer merely transfers credit risk but does not raise any upfront cash
against the transfer of risk. Compare with funded
derivative. In case of an unfunded derivative, the protection buyer is
entitled to seek compensation from the protection
seller in case of the
risk event happening. Thus, the credit exposure in the reference asset is
swapped against credit exposure in the protection seller.