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Basic Question 1 of 5
An alternative to buying bonds for a financial institution to diversify its credit exposure would be to:
B. buy CDS protection.
C. buy the reference entity.
A. sell CDS protection.
B. buy CDS protection.
C. buy the reference entity.
User Contributed Comments 2
| User | Comment |
|---|---|
| schnurr | ‘To diversify its credit exposure”. Wouldn’t buying cds protection diversify its exposure as well? |
| Logaritmus | @up: Buying CDS is taking simillar credit risks. |
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Colin Sampaleanu
Learning Outcome Statements
describe the carry forward model without underlying cashflows and with underlying cashflows;
CFA® 2025 Level II Curriculum, Volume 5, Module 30.