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NEW QUESTION: 1
Which of the following statements are true:
I. A credit default swap provides exposure to credit risk alone and none to credit spreads II. A CDS contract provides exposure to default risk and credit spreads III. A TRS can be used as a funding source by the party paying LIBOR or other floating rate IV. A CLN is an unfunded security for getting exposure to credit risk
A. II, III and IV
B. II and III
C. I, III and IV
D. II and IV
Answer: B
Explanation:
Explanation
A CDS contract provides exposure to default risk and the credit spread for a particular credit. It does not provide an exposure to the risk of interest rates going up or down. It is an instrument that allows institutions to take a view on the price of credit risk alone. Therefore statement I is false and statement II is true.
A total return swap (TRS) exchanges the return from an asset for a fixed or floating exchange rate. It is in essence a financing arrangement where one party pays the other interest to earn a return on an asset that it does not wish to hold itself, perhaps for liquidity reasons. The financed asset is held by the party paying the asset's returns, effectively creating a 'collateral'. Therefore statement III is correct.
A credit linked note is a funded instrument where the sellers of the protection have put up the money upfront in the form of a subscription to a note in case the credit losses are realized. Therefore statement IV is not correct.
NEW QUESTION: 2
In spanning tree algorithm, the switch with the ___________________ is elected as the root bridge.
A. highest numerical bridge ID
B. most number of active ports
C. None of these
D. lowest numerical bridge ID
Answer: D
NEW QUESTION: 3
Which one of the following statements best describes requirements prioritization?
A. It determines how requirements will be prioritized and how those priorities will be used to define the solution scope.
B. It is only used with the change-driven approach to business analysis.
C. It is only used with the plan-driven approach to business analysis.
D. It determines how requirements will be prioritized based on the most important stakeholders to the least important stakeholders.
Answer: A
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