credit default swap definition by Wordo

Noun

A

credit

derivative

contract

between

two

counterparties

,

whereby

the

buyer

(

seller

of

risk

)

makes

periodic

payments

to

the

seller

(

buyer

of

risk

)

in

exchange

for

the

right

to

a

payoff

if

there

is

a

default

or

other

credit event

in

respect

of

a

third

party

called

reference

entity

.