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Credit Default Swap
A financial instrument that enables an investor to transfer or mitigate their credit risk by exchanging it with another investor.
Insurance Contract
A legally binding agreement between an insurer and the insured, where the insurer agrees to compensate for certain losses in exchange for a premium.
Long Hedges
Occur when futures contracts are bought in anticipation of (or to guard against) price increases.
Short Hedges
Occur when futures contracts are sold to guard against price declines.
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