Your question is Credit Default Swaps. Take a moment with it on the right.
Talk me through your thinking if you like. When you're confident, submit your answer and I'll grade it like a real screen (7/10 or better passes).
Explain what credit default swaps (CDS) are and how they are used in credit risk management.
Cover the roles of the protection buyer, protection seller, and reference entity; explain the premium or spread, credit events, settlement mechanics, and how CDS can hedge or transfer default risk. Distinguish CDS spread risk from the underlying reference entity's default risk and identify key risks of using CDS.