At a Given Point in Time, the Price of a Credit

question 55

Multiple Choice

At a given point in time, the price of a credit default swap contract should be ________ related to the default risk of the securities covered by the contract. For a given set of securities that are covered by a credit default swap, the price of the contract should be _______ related to the default risk as it changes over time.

• A)​p ositively; positively
• B)positively; inversely
• C)Inversely; positively
• D)inversely; inversely

---

Definitions:

Citizenship

The status of being a recognized member of a state, with rights and duties.

Joint Venture Management

The coordination and administration of a joint venture, which involves two or more entities collaborating on a business project, sharing resources, risks, and rewards.

Liability Assumption

Liability assumption is the agreement to take on the legal responsibilities or debts of another party.

Investment Extent

The degree or scale to which an individual or entity commits assets or capital to various types of investments with the expectation of achieving a financial return.