The ________ Was a Contract,a Derivative,which Derived Its Value from the Credit

question 3

Multiple Choice

The ________ was a contract,a derivative,which derived its value from the credit quality and performance of any specified asset.

• A)Collateralized Debt Obligation (CDO)
• B)Arbitrage Pricing Tranch (APT)
• C)Special Purpose Vehicle (SPV)
• D)Credit Default Swap (CDS)

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Definitions:

Short Hedger

A short hedger is an investor or trader who enters into contracts to sell an asset in the future to hedge against the risk of falling prices.

Treasury Bond Futures

Contractual agreements to buy or sell a specified amount of U.S. Treasury bonds at a future date and price.

Interest Rates

The percentage of an amount of money which is charged for its use per a given period, typically expressed as an annual percentage.

S&P 500 Index

An American stock market index based on the market capitalizations of 500 large companies listed on the NYSE or NASDAQ.