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:

Accrued Wages

Salaries or wages that have been earned by employees but have not yet been paid by the company.

Net Income

What a company ultimately earns in profit once expenses and taxes are removed from its total income.

Adjusting Entries

Journal entries made in the accounting records to correct or update financial information before the preparation of financial statements.

Unearned Revenue

Money received by an entity for goods or services yet to be delivered or rendered, recognized as a liability until the obligation is fulfilled.