A digital default swap is a contract that is distinct from a credit default swap in that
A) It pays nothing is no credit event occurs.
B) It pays a fixed amount if a credit event occurs.
C) It has a single premium upfront instead of periodic premium payments.
D) Premium payments are only due if a credit event occurs.
Correct Answer:
Verified
Q15: Credit risk in bonds involves uncertainty about
Q16: Today, investor A buys protection on a
Q17: A collateralized default obligation (CDO) is a
Q18: If you are interested in speculating on
Q19: Bank A holds a credit risky asset
Q21: A $100 million CDO has tranches running
Q22: The CDS-Bond basis is the difference in
Q23: Credit risk in bonds involves uncertainty about
Q24: Suppose an investor wishes to sell protection
Q25: The "base" correlation in a CDO is
A)
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