You expect credit correlations to increase. If so, which of the following strategies is appropriate: (a) Long
Question:
You expect credit correlations to increase. If so, which of the following strategies is appropriate:
(a) Long a first-to-default (FTD) contract and long a second-to-default (STD) contract.
(b) Long FTD, short STD contracts.
(c) Short FTD, long STD contracts.
(d) Short FTD, short STD contracts.
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Firstly lets clarify what firsttodefault FTD and secondtodefault STD contracts are These are types of credit derivative contracts 1 An FTD contract pa...View the full answer
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