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Basic Question 1 of 5
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.
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I was very pleased with your notes and question bank. I especially like the mock exams because it helped to pull everything together.
Martin Rockenfeldt
Learning Outcome Statements
explain the principles underlying and factors that influence the market's pricing of CDS;
CFA® 2026 Level II Curriculum, Volume 4, Module 30.