true/false

1. A CDS could be dangerous especially since it may incentivize risky investments, like emerging markets bonds or subprime loaded MBS, and transfer risk outside of financial institutions to insurance industry as a form of insurance. 2. Credit default swaps contributed to the financial crisis of 2007-2009 by making it easier for sellers of insurance to assume and conceal risk.

Swap regulation was a component of Dodd Frank post 2008, this means that 3. If swaps, like CDS, become very regulated this will prevent the financial institutions from keeping risky investment products off their books.