If a Correlation Is -1

question 137

Multiple Choice

If a correlation is -1.00,then which type of relationship exists?

• A) perfect negative
• B) moderately strong
• C) weak
• D) nonexistent

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Definitions:

Credit Default Swaps

Financial swap agreements that transfer the credit exposure of fixed income products between parties.

CDS Buyer

An entity that purchases a credit default swap, obtaining protection against specific credit risks.

CDS Seller

A counterparty in a credit default swap agreement who provides credit protection, compensating the buyer in case of a debt default or other credit event.

Predatory Lending

Unscrupulous lending practices that impose unfair, deceptive, or abusive loan terms on borrowers, often leading to a debt trap.