The Seller of Credit Default Swaps

question 24

Multiple Choice

The seller of credit default swaps

• A) agrees to exchange payments with another security if interest rates change.
• B) receives payments if the underlying security defaults.
• C) is obliged to make payments if the underlying security defaults.
• D) can only sell them to owners of the underlying security.

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Definitions:

Medium Of Exchange

An intermediary instrument used to facilitate the sale, purchase, or trade of goods between parties, commonly accepted in the form of money.

Barter

The exchange of goods and services between parties without the use of money as a medium of exchange.

Bank Credit Cards

Financial instruments issued by banks that allow users to borrow funds from a pre-approved limit to purchase items or withdraw cash.

Bank Of America

A multinational investment bank and financial services holding company based in the United States, serving millions of customers worldwide.