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CFA Level II > 29: CDS > Flashcards

29: CDS Flashcards

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CFA flashcards
1
Q

CDS is a contract between two parties where:

A

Party 1 buys protection from
Party 2 against losses from the default of a borrower

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2
Q

If a credit event occurs, the credit protection buyer:

A

is compensated by the credit protection seller

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3
Q

CDS spread is the:

A

premium paid to the protection seller, by protection buyer

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4
Q

Long/short
Protection Buyer & Seller

A

Protection Buyer: short credit risk
Protection Seller: long credit risk

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CFA Level II (33 decks)

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