- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 30. Credit Default Swaps
- Subject 1. Basic Definitions and Concepts
CFA Practice Question
The cheapest-to-deliver option benefits the ______.
B. protection seller.
C. loan borrower.
A. protection buyer.
B. protection seller.
C. loan borrower.
Correct Answer: A
The protection buyer has the option to deliver the cheapest bond(s) upon default.
User Contributed Comments 3
| User | Comment |
|---|---|
| gregsob2 | really? in what sense? isnt it the protection seller who delivers the bond? |
| droko | the buyer delivers. |
| CFAJ | the protection seller either buys the defaulted bonds from the buyer of CDS or pays the difference between cheapest to deliver and notional amount |