The payment by the credit protection seller if a credit event occurs may ________.

Question

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The payment by the credit protection seller if a credit event occurs is usually determined by the decline in the value of the reference obligation. It may not be a predetermined fixed amount and is typically triggered by a credit event such as default, bankruptcy or restructuring of the reference entity. Therefore, option D is the most accurate answer. Option B is incorrect as it refers to the decline in the value of the reference entity rather than the obligation. Option A and C are also incorrect as they are not consistent with the basic principles of credit default swaps.

The Payment by the Credit Protection Seller If a Credit