Question

Which of following are not one of the new guidelines issued regarding Credit Default Swaps?

1.    The Guidelines permit non-retail users such as regulated financial entities and FPIs to sell protection

2.    They also allow non-retail users to buy protection for hedging or expressing their views on credit risk

3.    retail users are permitted to buy protection only for hedging.

4.    the aggregate limit of the notional amount of CDS sold by FPIs shall be 15% of the outstanding stock of corporate bonds

A only 1 is incorrect Correct Answer Incorrect Answer
B both 2 and 4 are incorrect Correct Answer Incorrect Answer
C 3 and 4 are incorrect Correct Answer Incorrect Answer
D Only 4 is incorrect Correct Answer Incorrect Answer
E All are correct Correct Answer Incorrect Answer

Solution

the aggregate limit of the notional amount of CDS sold by FPIs shall be 5% of the outstanding stock of corporate bonds. Rest of the statements are correct.

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