In a Credit Forward Contract Transaction

question 50

Multiple Choice

In a credit forward contract transaction

• A)the credit forward buyer is the lender who is trying to hedge the loan.
• B)the credit forward seller is the lender who is trying to hedge the loan.
• C)the credit forward buyer will pay the credit forward seller if the credit spread at the maturity of the forward contract is less than at the initiation of the contract.
• D)the credit forward seller will pay the credit forward buyer if the credit spread at the maturity of the forward contract is greater than at the initiation of the contract.
• E)the characteristics of the benchmark bond must be the same as those of the bank's loan to the borrower.

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Definitions:

Degrees of Freedom

Degrees of freedom refer to the number of independent values in a calculation that are free to vary when estimating statistical parameters.

Degrees of Freedom

The number of independent values or quantities which can be assigned to a statistical distribution, typically in the context of parameter estimation.

ANOVA F Test

A statistical method used to determine if there are any statistically significant differences between the means of three or more independent groups.

Standard Deviations

A standard used to assess the level of heterogeneity or diversity among values in a dataset.