- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Investments
- Learning Module 1. Market Organization and Structure
- Subject 3. Financial Intermediaries
CFA Practice Question
A fund may see that there is a substantial difference between U.S. dollar debt and the local currency debt of a foreign country, and enter into a series of matching trades (including currency swaps) to take advantage of the difference, while simultaneously entering into credit default swaps to protect against country risk and other types of specific risk. The fund is acting like a(n) ______ in the process.
B. arbitrageur
C. securitizer
A. dealer
B. arbitrageur
C. securitizer
Correct Answer: B
User Contributed Comments 4
| User | Comment |
|---|---|
| jam2del | Anyone care to elaborate on this question? Greatly appreciated |
| khalifa92 | he's making free money from swapping between two currencies. |
| timkalt | Are CDSs still used? |
| joeclark | It is the definition of Arbitrageu |