True or False: A CDS is designed to transfer the credit exposure of fixed income products between parties, where the pur
Posted: Thu May 19, 2022 7:00 am
True or False:
A CDS is designed to transfer the credit exposure of fixed
income products between parties, where the purchaser of the swap
makes payments up until the maturity date of a contract. Payments
are made to the seller of the swap. In return, the seller agrees to
pay off a third-party debt if this party defaults on the loan. It
is considered insurance against non-payment. A buyer of one might
be speculating on the possibility that the third party will indeed
default.
Thank you
A CDS is designed to transfer the credit exposure of fixed
income products between parties, where the purchaser of the swap
makes payments up until the maturity date of a contract. Payments
are made to the seller of the swap. In return, the seller agrees to
pay off a third-party debt if this party defaults on the loan. It
is considered insurance against non-payment. A buyer of one might
be speculating on the possibility that the third party will indeed
default.
Thank you