24-54 During the most recent financial crisis,the FI segment that was most negatively affected by credit default swaps was
A)commercial banks.
B)insurance companies.
C)pension funds.
D)finance companies.
E)mutual funds.

Question

Quizplus · Accepted Answer

Insurance companies were most negatively affected by credit default swaps during the most recent financial crisis. Many insurance companies had invested heavily in mortgage-backed securities and when the housing market collapsed, the value of these securities plummeted. Credit default swaps, which were meant to protect these companies from default, instead ended up amplifying the damage as the counterparties were unable to pay out in full. This led to some high-profile insolvencies in the insurance industry.

24-54 During the Most Recent Financial Crisis,the FI Segment That