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Which of the Following Is Correct Regarding Credit Derivatives

Question 52

Multiple Choice

Which of the following is correct regarding credit derivatives?


A) If the expected recovery value increases, then the size of payment upon the occurrence of a credit event will increase. This will increase the protection payment.
B) If the expected recovery value decreases, then the size of payment upon the occurrence of a credit event will decrease. This will increase the protection payment.
C) If the expected recovery value decreases, then the size of payment upon the occurrence of a credit event will remain stable. This will increase the protection payment.
D) If the expected recovery value decreases, then the size of payment upon the occurrence of a credit event will increase. This will increase the protection payment.

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