12. Which of the following contracts can transfer both credit risk and market risk to the...

12. Which of the following contracts can transfer both credit risk and market risk to the counterparty?

(a) Credit default swap

(b) Total return swap

(c) a and b of the above

Answer:

Expert Solution

Option B is correct

Total return swap

In total return swap, both systematic risk and credit risk is transferred but in CDS only credit risk is transferred.

jeff jeffy answered 2 years ago

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