Credit Default Swaps

Credit Default Swaps is a financial derivative that allows an investor to swap or offset their credit risk with that of another investor.

Credit Default Swaps

About Credit Default Swaps: 

  • It is a financial derivative that allows an investor to swap or offset their credit risk with that of another investor.
  • In a credit default swap contract, the buyer pays an ongoing premium similar to the payments on an insurance policy. In exchange, the seller agrees to pay the security’s value and interest payments if a default occurs.
  • It can be used for speculation, hedging, or as a form of arbitrage.
  • Credit default swaps played a role in both the 2008 Great Recession and the 2010 European Sovereign Debt Crisis.

What are Mutual Funds?

  • A mutual fund is a pool of money managed by a professional Fund Manager.
  • It is a trust that collects money from a number of investors who share a common investment objective and invests the same in equities, bonds, money market instruments and/or other securities.
  • The income / gains generated from this collective investment is distributed proportionately amongst the investors after deducting applicable expenses and levies.

Q1: What Is the Securities and Exchange Board of India (SEBI)?

The SEBI is a statutory regulatory body established by the Government of India in 1992. It was given statutory powers through the SEBI Act, 1992. Its objective is to regulate the securities market in India and protect the interests of investors in securities.

Source: SEBI allows MFs to sell Credit Default Swaps to boost corporate bond liquidity

Latest UPSC Exam 2025 Updates

Last updated on July, 2025

UPSC Notification 2025 was released on 22nd January 2025.

UPSC Prelims Result 2025 is out now for the CSE held on 25 May 2025.

UPSC Prelims Question Paper 2025 and Unofficial Prelims Answer Key 2025  are available now.

UPSC Calendar 2026 is released on 15th May, 2025.

→ The UPSC Vacancy 2025 were released 1129, out of which 979 were for UPSC CSE and remaining 150 are for UPSC IFoS.

UPSC Mains 2025 will be conducted on 22nd August 2025.

UPSC Prelims 2026 will be conducted on 24th May, 2026 & UPSC Mains 2026 will be conducted on 21st August 2026.

→ The UPSC Selection Process is of 3 stages-Prelims, Mains and Interview.

UPSC Result 2024 is released with latest UPSC Marksheet 2024. Check Now!

UPSC Toppers List 2024 is released now. Shakti Dubey is UPSC AIR 1 2024 Topper.

→ Also check Best IAS Coaching in Delhi

Vajiram Editor
Vajiram Editor
UPSC GS Course 2026
UPSC GS Course 2026
₹1,75,000
Enroll Now
GS Foundation Course 2 Yrs
GS Foundation Course 2 Yrs
₹2,45,000
Enroll Now
Prelims PowerupTest Series
Prelims PowerupTest Series
₹13000
Enroll Now
UPSC Mains Test Series
UPSC Mains Test Series
₹16000
Enroll Now
UPSC Mentorship Program
UPSC Mentorship Program
₹85000
Enroll Now
Enquire Now