Credit Default Swaps

question 60

Multiple Choice

Credit default swaps:

• A) will pay the holder the LIBOR interest rate.
• B) pay the borrower the LIBOR interest rate.
• C) are like insurance against a loss of value if the firm defaults on a bond.
• D) limit the amount of borrowing of all parties in the credit default swap.
• E) None of these.

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Definitions:

Serial Reproduction

A method of studying memory where information is passed and reproduced through a chain of individuals.

Recency Effect

The phenomenon where people tend to remember the last items in a series best, often observed in studies of memory and information recall.

Primacy Effect

The tendency to remember information presented at the beginning of a list better than information at the middle or end.

Memory Span

The number of items, typically words or numbers, that an individual can retain and recall in correct order in short-term memory.