Which of the following statements regarding Credit Default Swap (CDS) is INCORRECT?

Group of answer choices

During the years prior to the 2008 financial crisis, a large amount of CDS have been created to insure portfolio of mortgage loans, even the sub-prime mortgage loans.

Because a CDS is effectively an insurance policy, the CDS market has always been heavily regulated to make sure the issuers of CDS have enough capital to pay claims when necessary.

It is a type of financial derivative that insures a loan against default.

CDS was used to improve the credit ratings on some mortgage-backed securities.