A Credit Default Swap

question 45

Multiple Choice

A credit default swap:

• A) transfers the credit risk in a fixed income instrument from one counterparty to another.
• B) is not considered a credit derivative.
• C) provides the buyer with periodic payments.
• D) can only be traded if the seller owns the underlying instrument.
• E) all of the above.

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Definitions:

Price Wars

A competitive situation in which retailers and manufacturers continuously reduce prices to outdo each other, often resulting in minimal profits.

Comparative Advertising

A marketing strategy where a brand's product or service is directly compared to a competitor's to highlight its superiority.

Pure Monopoly

A market structure where a single seller has exclusive control over a product or service, with no close substitutes available.

Unique Product

A good or service that is distinct in its features, benefits, or value propositions from others in the market.