Multiple Choice
If you expect default correlations to increase in the future,what trade might you engage in to profit from this view?
A) Buy the senior tranche of a CDO.
B) Buy a second-to-default basket option and sell a first-to-default basket.
C) Sell a second-to-default basket option and buy a first-to-default basket.
D) Short the equity tranche of a CDO.
Correct Answer:

Verified
Correct Answer:
Verified
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