In a ________, the protection buyer pays a fee to the protection seller in return for the right to receive a payment conditional upon the occurrence of a credit event by the reference obligation or the reference entity.

Question

Quizplus · Accepted Answer

The description given in the question matches the definition of a credit default swap (CDS). In a CDS, the protection buyer pays a fee to the protection seller for the right to receive a payment if a credit event occurs in the reference obligation or entity. The payment is typically triggered by default, bankruptcy, or other credit-related events. Therefore, D is the best choice.

In a ________, the Protection Buyer Pays a Fee to the Protection