The credit derivative that,for a fee,gives the purchaser the right to receive profits that are tied either to the price of an underlying security or to an interest rate is called a
A)credit option.
B)credit swap.
C)credit-linked note.
D)credit default swap.

Question

Quizplus · Accepted Answer

A credit option is a financial derivative that gives the holder the right, but not the obligation, to benefit from changes in the credit quality of an underlying asset, such as a bond or loan, typically tied to the price of the security or an interest rate.

The Credit Derivative That,for a Fee,gives the Purchaser the Right