- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 32. Credit Default Swaps
- Subject 1. Basic Definitions and Concepts
CFA Practice Question
A Credit Default Swap (CDS) protects against:
II. credit risk.
III. funding risk.
I. interest risk.
II. credit risk.
III. funding risk.
A. I and II
B. II and III
C. II only
Explanation: A credit default swap (CDS) is a bilateral contract under which two counterparties agree to isolate and separately trade the credit risk of at least one third-party reference entity.
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