Question
Which of the following would be the best definition of a Credit Default Swap? A financial derivative or contract that allows an investor to swap
Which of the following would be the best definition of a Credit Default Swap?
A financial derivative or contract that allows an investor to "swap" or offset credit risk with another party, typically an insurer, thereby providing price protection on a security. | ||
The ability to swap out of bad investment by "putting" that security back to the issuer at par | ||
A financial commitment whereby a government sponsored entity guarantees the security price. | ||
A special provision in a mortgage backed security that allows investors to swap tranches if there is a credit default incident. |
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