Which of the Following Is Not a Property or Benefit

question 23

Multiple Choice

Which of the following is not a property or benefit of credit derivatives?

• A) In instruments subject to multiple sources of risk (such as junk bonds), they enable separating out credit risk from other risks.
• B) They enable hedging out credit risk of securities that are illiquid and hard to sell.
• C) They reduce the overall level of default risk in the economy.
• D) They offer reference prices that make it easier to price other securities that have credit risk.

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