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Which of the following statements best describes a CDS? A CDS pays a return when homeowners default on mortgages. A CDS is a company established
Which of the following statements best describes a CDS? A CDS pays a return when homeowners default on mortgages. A CDS is a company established so that a bank can move loans off its balance sheet. A CDS can be used to bundle mortgages together into one financial asset. Assume that Annovo Financial and Bennovo Financial were banks with the same financial condition, except that Annovo Financial had bought fewer CDSs that provided insurance against defaults on mortgages. (Note: Assuming that the companies are almost identical isolates the impact of the one difference.) If many homeowners began to default on their mortgages, Annovo Financial's financial condition would become than Bennovo Financial's condition. If most financial institutions were like Annovo Financial, financial institutions could be confident in lending to each other, and a tight credit market would be likely. Which of the following statements best describes a CDS? A CDS pays a return when homeowners default on mortgages. A CDS is a company established so that a bank can move loans off its balance sheet. A CDS can be used to bundle mortgages together into one financial asset. Assume that Annovo Financial and Bennovo Financial were banks with the same financial condition, except that Annovo Financial had bought fewer CDSs that provided insurance against defaults on mortgages. (Note: Assuming that the companies are almost identical isolates the impact of the one difference.) If many homeowners began to default on their mortgages, Annovo Financial's financial condition would become than Bennovo Financial's condition. If most financial institutions were like Annovo Financial, financial institutions could be confident in lending to each other, and a tight credit market would be likely
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