The payment of any compensation for loss is contingent on the actual occurrence of a credit-related event under a
A) total return swap.
B) credit default swap.
C) collar.
D) forward rate agreement.
E) swap agreement.

Question

Quizplus · Accepted Answer

The payment of compensation for loss in a credit default swap is triggered by the occurrence of a credit-related event, such as the default or bankruptcy of the reference entity. In other derivatives listed, such as a total return swap or forward rate agreement, the payment structure is based on financial performance or interest rates.

The Payment of Any Compensation for Loss Is Contingent on the Actual