A CDS with a Number of Reference Entities Provides a Payoff

question 11

Multiple Choice

A CDS with a number of reference entities provides a payoff when any of the reference entities defaults. What is a name for this CDS?

• A) Binary CDS
• B) Add-up Basket CDS
• C) First-to-Default CDS
• D) n-to-Default CDS

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Definitions:

Voucher

A voucher is a document that authorizes a payment and records details about it, acting as proof of the transaction for accounting purposes.

Net Method

An accounting practice where discounts for early payment are considered directly in the invoice price, reducing the recorded sale and purchase amounts if the discount is taken.

Periodic Inventory System

An alternative phrasing for the Periodic Inventory Method, emphasizing it as a system of managing and accounting for inventory in discrete time periods, typically annually.

Journal Entries

The method by which financial transactions are recorded in a company's accounting records, detailing debits and credits to specific accounts.