Which of the Following Statements Concerning Credit Default Swaps Is

question 3

Multiple Choice

Which of the following statements concerning credit default swaps is FALSE?

• A)As of year-end 2008, CDSs are completely outside of regulatory boundaries.
• B)A CDS is a derivative security that may be used for hedging risk or for speculative purposes.
• C)In order be a party to a CDO, at least one of either the buyer or seller must own the underlying asset.
• D)CDSs allow banks to severe their links to their borrowers, thereby reducing their incentive to screen and monitor the ability of borrowers to repay.

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Definitions:

Entorhinal Cortex

The section of the medial temporal lobe containing grid cells that respond to very specific locations in the physical environment.

Grid Cells

Neurons in the entorhinal cortex that respond when an animal or person approaches a specific location in the physical environment.

Cognitive Map

Spatial knowledge of the physical environment gained through experience.

Reward

An event that increases the occurrence of the instrumental behavior that precedes the event.