In a Credit Default Swap Index, the Credit Risk of a Standardized

question 51

True/False

In a credit default swap index, the credit risk of a standardized basket of reference entities is transferred between the protection buyer and protection seller with the contract continuing even if there is a credit event for any of the reference entities in the basket but at a lower premium to reflect the credit protection for less reference entities.

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Definitions:

Thorndike

Edward Thorndike, an American psychologist, who is famous for his work in the early 20th century on learning theory and the law of effect.

Behavior Modification

The application of operant-conditioning techniques to teach new responses or to reduce or eliminate maladaptive or problematic behavior; also called applied behavior analysis.

Puzzle Boxes

Experimental devices used in animal learning research, where an animal must solve a problem or manipulate mechanisms to escape or obtain a reward.

Thorndike

An American psychologist who developed the law of effect, which states that behaviors followed by positive outcomes are likely to be repeated, while those followed by negative outcomes are not.