CFA Practice Question

There are 252 practice questions for this study session.

CFA Practice Question

If an investor expects the credit curve will become steeper, he will likely take a ______ position in a long-term CDS and take a ______ in a short-term CDS.
Correct Answer: short, long

A steeper curve means that long-term credit risk will increase relative to short-term credit risk.

User Contributed Comments 1

User Comment
davidt87 why? doesn't the buyer of a CDS benefit from a worsening of the spread? shouldnt they go long long-term given they expect it will increase relative to short term?
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