23-37 the Payoff of a Credit Spread Call Option Increases

question 17

True/False

23-37 The payoff of a credit spread call option increases as the yield spread on a specified benchmark bond increases above some exercise spread.

---

Definitions:

Import Quotas

Restrictions set by a government on the quantity or value of certain goods that can be imported into a country, often to protect domestic industries.

Exchange Rate

The price at which one currency can be exchanged for another in the foreign exchange market.

Open-Economy Macroeconomic Model

An analytical framework considering the interactions between the domestic economy and the rest of the world, including trade, capital flows, and exchange rates.

Budget Deficit

A situation where a government's expenditures exceed its revenues, leading to a shortfall that must be financed through borrowing.