Question

Explain the difference between a regular credit default swap and a binary credit default swap. 

   Explain the difference between a regular credit default swap and a binary credit default swap.
Options, Futures, and Other Derivatives
Options, Futures, and Other Derivatives
John C. Hull 10th Edition
Chapter 25, Problem 1 ↓

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A Credit Default Swap is a financial derivative that allows an investor to "swap" or offset their credit risk with that of another investor. Essentially, it is a contract between two parties where the buyer of the CDS makes periodic payments to the seller, and  Show more…

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Explain the difference between a regular credit default swap and a binary credit default swap.
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