Q1-10. Which of the following statements are TRUE about the following fixed income contracts? I. A seller in a Repo contract is the one who lends money to the buyer. II. A seller in an interest rate SWAP contract is the one who believes that the market interest rate will go up in the future. III. A seller in a CDS contract is the one who pays CDS premium. IV. A high yield in a CDO tranche is due to low embedded default risk. A. I and II only D. III and IV only C. I and III only B. II and IV only E. None of the above

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Q1-10. Which of the following statements are TRUE about the following fixed income contracts?
I. A seller in a Repo contract is the one who lends money to the buyer.
II. A seller in an interest rate SWAP contract is the one who believes that the market interest
rate will go up in the future.
III. A seller in a CDS contract is the one who pays CDS premium.
IV. A high yield in a CDO tranche is due to low embedded default risk.
A. I and II only
D. III and IV only
C. I and III only
B. II and IV only
E. None of the above
Transcribed Image Text:Q1-10. Which of the following statements are TRUE about the following fixed income contracts? I. A seller in a Repo contract is the one who lends money to the buyer. II. A seller in an interest rate SWAP contract is the one who believes that the market interest rate will go up in the future. III. A seller in a CDS contract is the one who pays CDS premium. IV. A high yield in a CDO tranche is due to low embedded default risk. A. I and II only D. III and IV only C. I and III only B. II and IV only E. None of the above
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