After a long time I am putting few basic quiz questions, Lets check out who hit the bull’s eye. You can provide your answers by putting up the comments , there are only two questions but they will help to understand the basics OTC derivative market:
- What is correct about a credit default swap (CDS)?
- A CDS is the exchange of two cash flows: a fee payment and a conditional payment, which occurs only if certain circumstances are met.
- The CDS will have value for the protection seller only if defined credit conditions are met
- The protection seller will always receive the premiums.
- CDS is a type of insurance in which default of an asset triggers payment Continue reading “CDS & SWAPS”