Which of the Following Is a Major Difference Between a Pure

question 33

Multiple Choice

Which of the following is a major difference between a pure credit swap and a default option?

• A)In a pure credit swap the premium payment on the swap is paid up front, while the fees of a default option are paid over the life of the default option.
• B)In a pure credit swap the premium payments on the swap are paid over the life of the swap, while the fee of a default option is paid up front.
• C)In a pure credit swap the premium payment on the swap is paid at maturity, while the fees of a default option are paid over the life of the default option.
• D)In a pure credit swap the premium payments on the swap are paid over the life of the swap, while the fee of a default option is paid at maturity.

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Definitions:

Normal Distributions

A type of continuous probability distribution for a real-valued random variable, where the data tend to cluster around a mean value.

Significance Level

The threshold below which a result is considered statistically significant, indicating the probability of rejecting the null hypothesis when it is actually true.

Hypotheses

Proposed explanations made on the basis of limited evidence as a starting point for further investigation.

Starting Salaries

The initial compensation that an employer offers to a new employee.