If You Are Interested in Speculating on a Deterioration in the Credit

question 25

Multiple Choice

If you are interested in speculating on a deterioration in the credit quality of a company, which of the following would be appropriate?

• A) Buy the bonds of the company.
• B) Short the forwards on the credit spread of the company.
• C) Buy credit spread call options on the company's bonds (i.e., options that pay off if the spread widens).
• D) Sell put options on the company's bonds.

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Definitions:

CRM

Customer Relationship Management, a strategy for managing an organization's relationships and interactions with current and potential customers.

Continuous Attention

The ongoing focus and monitoring of a specific task, project, or situation to ensure its successful progression or completion.

Social Media

Digital tools and websites that allow people to produce, distribute content, and engage in networking activities online.

Service And Product Quality

The measure of how well a delivered service or manufactured product meets the expectations of the customer.