Credit default swaps are most like:
A)inverse floaters.
B)call options on fixed assets.
C)an insurance policy.
D)an interest rate swap.
E)a delinquent loan.

Question

Quizplus · Accepted Answer

Credit default swaps are a type of financial contract that provides insurance against default risk. One party agrees to make periodic payments to another party in exchange for protection in case a credit instrument defaults. Therefore, credit default swaps are most similar to insurance policies.

Credit Default Swaps Are Most Like