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2. Which of the following statement about Credit Default Swap (CDS) is TRUE I. You can trade CDS only if you are exposed to the

2. Which of the following statement about Credit Default Swap (CDS) is TRUE

I. You can trade CDS only if you are exposed to the credit risk of the reference entity.

II. CDS spreads depend on the probability that a particular company will default during a particular period of time.

III. Buying a risky bond is equivalent to buying a risk-free bond and selling a CDS on this bond.

IV. Physical settlement is now the standard means of compensation for CDS.

A. I and III;

B. II and IV;

C. II and III;

D.II and IV;

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