What Is a Credit Default Swap

question 18

Multiple Choice

What is a credit default swap?

• A)a swap agreement where two parties swap credit payments
• B)an agreement to swap interest payments when one party defaults
• C)a type of insurance against bond defaults
• D)a swap between credit rating agencies

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Definitions:

Conditioned Stimulus

A formerly neutral signal that, through linkage with an unconditioned stimulus, eventually elicits a conditioned reaction.

Classical Conditioning

A learning process where a neutral stimulus becomes associated with a meaningful stimulus, eliciting a conditioned response.

Systematic Desensitization

A behavioral therapy technique used to reduce phobic responses and anxiety through gradual exposure to the feared object or situation paired with relaxation techniques.

Relaxation

The act or state of reducing tension or stress, often achieved through techniques such as meditation, deep breathing, or muscle relaxation exercises.