What is Share Based Compensation? As the word suggests, Share-Based Compensation is compensation that a company pays in the form of equity shares of the company instead of cash. A company can distribute its shares to reward workers, executives, and directors. Such compensation helps a company motivate employees, create a bonding with the organization, and does not affect the company's cash flow.
What are Credit Derivatives? Credit Derivatives (or CDs) are contracts where the underlying asset is a credit asset. The objective of such a contract is to assist holders in transferring the credit risk without transferring the asset. The credit risk is the risk of the borrower defaulting on the loan. We can say that such a contract works as an insurance policy enabling the holder to transfer the risk on the credit