Which of the following is NOT true?
A)FI bearing the credit risk of a loan is often different from the FI that issued the loan.
B)The buyer of a credit swap makes periodic payments to the seller until the end of the life of the swap.
C)Banks have been more willing than the insurance companies to bear credit risk.
D)The settlement of the swap in the event of a default involves either physical delivery of the bonds or a cash payment.
E)Credit swap specifies the number of different bonds that can be delivered in the event of a default.

Question

Quizplus · Accepted Answer

This statement is not true as insurance companies are known to bear credit risks through various instruments like credit default swaps and structured products. Banks and insurance companies both have been involved in credit risk bearing activities. Therefore, option C is not true.

Which of the Following Is NOT True