Financial firms that underwrite credit default swaps:
A)pay an annual premium to the swap's holder
B)receive an annual premium from the swap's holder
C)are reducing their risk by underwriting these financial instruments
D)potentially receive large payouts if the issuers of securities underlying the swaps default on their obligations to the holders of the securities
E)were not a part of the 2008 financial crisis

Question

Quizplus · Accepted Answer

Financial firms that underwrite credit default swaps receive an annual premium from the swap's holder, as they are providing insurance against the default of a borrower.

Financial Firms That Underwrite Credit Default Swaps