Question

Evaluate the following statements regarding Credit Default Swaps (CD

  • S : 1. It is a credit derivative contract that enables an investor to transfer credit risk. 2. The buyer of the CDS makes periodic payments to the seller. 3. If a credit event (default) occurs, the seller of the CDS compensates the buyer. Which of the statements above is/are correct? 
A 1 and 2 only
B 2 and 3 only
C 1, 2, and 3
D 1 and 3 only
E 2 only
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