- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 30. Credit Default Swaps
- Subject 2. Credit Events and Settlement Protocols
CFA Practice Question
In the cash settlement of a CDS,
B. The buyer pays the par value and gets the defaulted debt from the seller.
C. The seller pays the buyer the difference between par value and post-default market value of the debt.
A. The buyer delivers the defaulted debt and seller pays the par value.
B. The buyer pays the par value and gets the defaulted debt from the seller.
C. The seller pays the buyer the difference between par value and post-default market value of the debt.
Correct Answer: C
A: Physical settlement.
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