Which of the Below Statements Is FALSE

question 68

Multiple Choice

Which of the below statements is FALSE?

• A) If a credit event occurs that requires a payout, the collateral manager must make a payment to the protection buyer.
• B) There are now standard synthetic CDO tranches that can be purchased by investors based on a standardized reference portfolio.
• C) The motivation in a balance sheet transaction is to retain loans on a financial institution's balance sheet and obtain capital relief.
• D) A synthetic CDO uses credit derivatives, most commonly credit default swaps, to create exposure to reference entities rather than purchasing the cash instruments of those reference entities themselves.

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Finance Professor

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