In a One-Year Forward Contract on a CDS That Will

question 9

Multiple Choice

In a one-year forward contract on a CDS that will last five years, what happens if there is a default during the first year? choose one)

• A) There is a payoff to the forward protection buyer at the time of default
• B) There is a payoff to the forward protection buyer at the end of one year
• C) There is a payoff to the forward protection buyer at the end of six years
• D) The contract ceases to exist

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Definitions:

Middle Manager

A managerial position that involves overseeing junior managers while being responsible to senior managers, typically involving the management of operational-level activities.

Introversion

A personality trait signified by a focus on internal feelings rather than external sources of stimulation.

Agreeableness

A characteristic showcasing friendliness, benevolence, and a willingness to work together.

Trait Terms

Words or phrases used to describe consistent patterns in behavior, thought, and emotion in an individual.