Credit Risk Transfer Mechanisms
Free GARP FRM Part I lesson in Foundations of Risk Management. 19 min read, ~2,855 words.
Traditional credit-risk mitigation (netting, collateral, third-party guarantees, credit insurance) reduces exposure but does not transfer risk to capital markets. Credit derivatives (single-name and index CDS, total return swaps, CLNs) transfer credit risk to a counterparty without selling the underlying loan. TRS transfers the full economic return including spread moves; CDS...
Read the full lesson, free →
Worked examples and practice. Free with a free account, no card.
What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- 1
- 2
- 3
- 4
- 5
- 6
- 7
- 8
- 9
- 10
- 11
Browse all free FRM Part I lessons or jump into free FRM Part I practice questions.