A First ÐTo-Default (FTD)basket Pays Off When the First Default

question 4

Multiple Choice

A first Ðto-default (FTD) basket pays off when the first default occurs in the given basket of "names." The spread on a first-to-default basket is:

• A)At least the narrowest credit spread of all the names in the basket and at most the widest credit spread of all the names in the basket.
• B)Equal to the average credit spread across all the names in the basket.
• C)At least the widest credit spread of all the names in the basket and at most the sum of the credit spreads across all the names in the basket.
• D)Equal to the widest credit spread of all the names in the basket.

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Definitions:

Conflict Process

The sequence of events and interactions that occur from the beginning to the resolution of a conflict.

Positive Outcome

The beneficial result or effect of an action, situation, or decision.

Cohesiveness

The extent to which members of a group or team can achieve unity and remain bonded towards common goals.

Conflict Process

The sequence of events and interactions that occur when there is a disagreement or dispute between individuals or groups.