A Credit Default Swap

Multiple Choice

A credit default swap

A) Is what happens when homeowners swap their mortgages with their neighbors
B) Is a way for investors in collateralized debt obligations (or CDO's) to make even more money
C) Is a way for investors in collateralized debt obligations (or CDO's) to reduce the risk of an increase in mortgage foreclosures
D) Is a way for investors to increase the risks to homeowners
E) Exists only in markets with subprime mortgages