Likely going to hear quite a bit about Credit Default Swaps (CDS) this week so wanted to dive into it to get a better understanding as someone not in finance. Sharing here for those who may find this 🧵
Credit Default Swaps (CDS) act like insurance for loans, protecting investors or financial institutions from a borrower's potential default. The CDS buyer pays a fee to the CDS seller, who agrees to cover losses if the borrower can't repay their debt.