Which of the following is essentially a type of insurance policy, but is regulated as a financial derivative?

Question

Quizplus · Accepted Answer

All options (A) futures contracts, (B) interest rate swaps, and (C) put options are typically traded on exchanges and are regulated as financial derivatives. However, (D) credit default swaps (CDS) are essentially insurance policies against the default of a borrower, but they are not regulated as insurance products. Instead, CDS are regulated as financial derivatives because they are traded on various exchanges and involve the transfer of credit risk from one party to another.

Which of the Following Is Essentially a Type of Insurance