ACI
3I0-012 · Question #299
Which of the following statements about Credit Default Swaps (CDS) is correct?
The correct answer is D. CDS provide compensation to the protection buyer, should a specified credit event occur to a third party entity. See the full explanation below for the reasoning.
Question
Which of the following statements about Credit Default Swaps (CDS) is correct?
Options
- ACDS are used to recover funds from defaulted swap counterparties.
- BCDS provide protection against specified credit events to the party receiving the CDS premium payments.
- CCDS provide protection against the default of the trade counterparty that buys the CDS.
- DCDS provide compensation to the protection buyer, should a specified credit event occur to a third party entity.
How the community answered
(53 responses)- A13% (7)
- B6% (3)
- C4% (2)
- D77% (41)
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