Which of the Following Is the Best Definition of Credit

question 130

Multiple Choice

Which of the following is the best definition of credit default swap?

• A) Risk that futures prices will not move directly with cash price hedged.
• B) An option that gives the owner the right, but not the obligation, to buy an asset.
• C) A contract that pays off when a credit event occurs, default by a particular company termed the reference entity, giving the buyer the right to sell corporate bonds issued by the reference entity at their face value.
• D) Hedging an asset with contracts written on a closely related, but not identical, asset.
• E) A financial asset that represents a claim to another financial asset.

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Definitions:

Basic Need

Fundamental requirements necessary for sustaining human life, including food, water, shelter, and safety.

Subjective Well-Being

Self-perceived happiness or satisfaction with life. Used along with measures of objective well-being (for example, physical and economic indicators) to evaluate people’s quality of life.

Financial Satisfaction

The feeling of contentment or happiness with one's financial situation, including income, savings, and investments.

Hunger-Suppressing Hormone

A hormone like ghrelin that regulates feelings of hunger and satiety, helping to control appetite.