Multiple Choice
A credit forward is a forward agreement that
A) hedges against a decrease in default risk on a loan after the loan rate is determined and the loan issued.
B) hedges against an increase in default risk on a loan before the loan rate is determined and the loan issued.
C) hedges against an increase in default risk on a loan after the loan rate is determined and the loan issued.
D) hedges against a decrease in default risk on a loan before the loan rate is determined and the loan issued.
E) hedges against an increase in default risk on a loan after the loan rate is determined and before the loan is issued.
Correct Answer:
Verified
Correct Answer:
Verified
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