Which of the following is a major difference between a pure credit swap and a default option?
A) In a pure credit swap the premium payment on the swap is paid up front, while the fees of a default option are paid over the life of the default option.
B) In a pure credit swap the premium payments on the swap are paid over the life of the swap, while the fee of a default option is paid up front.
C) In a pure credit swap the premium payment on the swap is paid at maturity, while the fees of a default option are paid over the life of the default option.
D) In a pure credit swap the premium payments on the swap are paid over the life of the swap, while the fee of a default option is paid at maturity.
Correct Answer:
Verified
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