In regards to a credit-linked note (CLN) , which of the below statements is FALSE?
A) In contrast to a standard bond, the maturity value does not depend on the performance of the reference issuer.
B) If a credit event occurs with respect to the reference issuer, then (1) the bond is paid off, and (2) the maturity value is adjusted down.
C) The compensation for the investor accepting the credit risk of the reference issuer is an enhanced coupon payment.
D) Typically, CLNs have a maturity of anywhere from three months to several years, with one to three years being the most likely term of credit exposure.
Correct Answer:
Verified
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