In a ____, a Buyer Makes Periodic Payments to a Seller

question 59

Multiple Choice

In a ____, a buyer makes periodic payments to a seller in exchange for protection against the possible default of debt securities specified in the contract.

• A)default option contract
• B)default futures contract
• C)bankruptcy contract
• D)credit default swap

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Definitions:

Annuity

An annuity is a financial product that pays out a fixed stream of payments to an individual, typically used as an income stream for retirees.

Annual Interest

Annual interest is the amount of interest due over the course of a year on borrowed funds or invested capital.

Contract Rate

The agreed-upon rate specified in a contract for services or lending/borrowing, which could refer to interest rates or payment amounts for contractual services.

Bond

A debt security under which the issuer owes the holder a debt and is obliged to pay interest and/or to repay the principal at a later date.