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What is the full form of CDS?

  • A.Call Detail Swap
  • B.Corporate Debt Swap
  • C.Credit Default Swap
  • D.None

Answer: C

Correct answer: Credit Default Swap

A credit default swap is insurance against a borrower’s default: the buyer pays a periodic premium and the seller compensates them if the reference entity fails. Its role in the 2008 crisis came from being sold in enormous volume by parties who had not reserved against having to pay.

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