ABSTRACT
The latest additions to the family of derivatives are those relating to an underlying credit exposure. The Bank of England defines credit derivatives as follows:
“Credit derivativesl” is a basket term used to describe various swaps and option contracts designed to assume or lay off credit risk on loans and other assets, in return for either interest payments or payment of premium. The transfer of credit risk may be for the whole life of the asset or for a shorter period, and it may be a complete or a partial transfer of credit risk
