Which of the Below Statements Is TRUE

question 36

Multiple Choice

Which of the below statements is TRUE?

• A) In a credit default swap index, the credit risk of a standardized basket of reference entities is not transferred between the protection buyer and protection seller.
• B) The mechanics of a credit default swap index are entirely different from that of a single-name credit default swap.
• C) The parties to a credit default swap are the credit protection buyer and the credit protection seller, the latter providing protection should a credit event occur for a reference entity or pool of reference entities during the life of the contract and the former making periodic payments for the protection.
• D) There are only two types of credit default swaps: single-name credit default swap and credit default swap indexes.

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Definitions:

Deceptive Omissions

The act of intentionally withholding or concealing important information, leading to misrepresentation or fraud.

Exaggerated Sales Talk

Promotional statements and claims that stretch the truth or embellish the virtues of a product or service beyond reasonable limits.

Misleading Claims

False or deceptive statements made, especially in advertising or marketing, that can misguide consumers regarding the true nature or benefits of a product or service.

Unfair Claims

Practices in the insurance industry that unreasonably delay, deny, or reduce payment to policyholders.