CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

A fund may see that there is a substantial difference between U.S. dollar debt and the local currency debt of a foreign country, and enter into a series of matching trades (including currency swaps) to take advantage of the difference, while simultaneously entering into credit default swaps to protect against country risk and other types of specific risk. The fund is acting like a(n) ______ in the process.

A. dealer
B. arbitrageur
C. securitizer
Correct Answer: B

User Contributed Comments 4

User Comment
jam2del Anyone care to elaborate on this question? Greatly appreciated
khalifa92 he's making free money from swapping between two currencies.
timkalt Are CDSs still used?
joeclark It is the definition of Arbitrageu
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