A Credit Default Swap Is Essentially A

question 7

Multiple Choice

A credit default swap is essentially a:

• A)put option on the firm's assets.
• B)call option on the firm's assets.
• C)put option on the firm's debt.
• D)call option on the firm's debt.

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Definitions:

Holder in Due Course

A legal term that refers to a person who has received a negotiable instrument in a certain way that grants them the right to collect it free from many defenses.

Disclose

To reveal or make known information, often in the context of legal, financial, or commercial transactions.

Fraudulent Alteration

The unauthorized change or modification of a document with the intent to deceive or defraud.

Promissory Note

A written, legally binding document where one party promises to pay a specified sum of money to another under agreed terms.