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:

Chapter 7 Liquidation

A process under the U.S. Bankruptcy Code where a debtor's assets are sold off to pay creditors, and the debtor's remaining debts are discharged.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services delivered or used but not yet paid for.