credit rating agencies and credit default swaps

Credit rating agencies are independent companies that assess the creditworthiness of individuals, organizations, or financial securities. They assign ratings indicating the likelihood of default on debts or obligations. Credit default swaps (CDS) are financial contracts between two parties, where one pays regular premiums to protect against the default of a specific debt obligation or security. The other party agrees to compensate in case of default, providing insurance-like coverage for the debt.

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