Why should I choose AnalystNotes?

AnalystNotes specializes in helping candidates pass. Period.

Find out more

Basic Question 0 of 12

An alternative to buying bonds for a financial institution to diversify its credit exposure would be to:

A. sell CDS protection.
B. buy CDS protection.
C. buy the reference entity.
Check Answer Next Q Print

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.
You need to log in first to add your comment.
You have a wonderful website and definitely should take some credit for your members' outstanding grades.
Colin Sampaleanu

Colin Sampaleanu

Learning Outcome Statements

explain the swap rate curve and why and how market participants use it in valuation;

calculate and interpret the swap spread for a given maturity;

describe short-term interest rate spreads used to gauge economy-wide credit risk and liquidity risk;

CFA® 2025 Level II Curriculum, Volume 4, Module 26.