Why Were Credit Default Swaps Initially Considered Low Risk

question 3

Multiple Choice

Why were credit default swaps initially considered low risk?

• A)Interest rates were low, which lowered the associated risk.
• B)Credit default swaps were backed by the federal government.
• C)Credit default swaps were backed by mortgage-backed securities.
• D)Insurance companies could easily cover any losses, as they were backed mostly by bonds.

Gain a thorough understanding of liabilities including known, estimated, and contingent liabilities, and the recognition criteria for each.

Understand the fundamentals of payroll accounting including gross pay, deductions, and net pay.

Calculate and distinguish between various payroll taxes and liabilities including FICA, FUTA, and SUTA taxes.

Identify and understand short-term financial instruments like notes payable, including their interest calculations and maturity values.

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Definitions:

Ben Franklin

Benjamin Franklin was one of the Founding Fathers of the United States, known for his contributions as an inventor, scientist, diplomat, and philosopher, as well as for his pivotal role in the American Revolution and the drafting of the U.S. Constitution.

James Madison

The fourth President of the United States (1809-1817) and is considered one of the Founding Fathers, known for his role in drafting the U.S. Constitution and the Bill of Rights.

Diversity

The inclusion and representation of different types of people (such as different races, cultures, genders, etc.) in a group or organization to reflect a variety of backgrounds and perspectives.

New Constitution

Typically refers to the adoption or significant revision of a foundational legal document that outlines the governance structure of a nation or organization.