All categories

3 years ago

Define credit default swap.

Business

1 answer:

KATRIN_1 [288]3 years ago

3 0

Answer:

Credit Default Swap (CDS) is a financial swap agreement or contract that allows investors to swap their credit risk with the credit risks of other investors.

Explanation:

Credit Default Swap is the most common form of credit derivative. It guarantees against bond risk and work like insurance policies.

If a lender is afraid of not being paid by his or her borrower, the lender can buy a CDS from another investor to offset the risk. The buyer of the CDS is required to makes some payments to the seller and in turn receive the loan repayment if the initial borrower defaults.

Third parties that sell CDS are usually banks, insurance companies and hedge funds.

You might be interested in

The entry to record the use of direct materials in production would include a A. credit to Finished Goods Inventory. B. debit to

earnstyle [38]

Answer:

B. debit to WIP inventory

Explanation:

The journal entry to record the usage of direct material in production is

Work in Process Inventory Dr.

To Raw Material Inventory

(Raw materials consumed recorded)

Raw material inventory is an asset. It's consumption should reduce it's balance. A debit increases an asset's balance while a credit reduces it's balance.

Work in process, like raw material is an inventory account i.e an asset. A debit increases their balance whereas a credit reduces it.

Here, raw materials i.e direct material have been issued for production, which would reduce their balance and increase the balance of work in process as finished goods are yet to be made.

3 0

4 years ago

"On average, a customer waits 8 minutes in a queue and customers arrive at a rate of 15 per hour. What is the average number of

mote1985 [20]

Answer:

The Answer is A) 2

Explanation:

Drawing details from the question, the formula for calculating Average Waiting Time under the Single -Server Queue Model is given as:

Average Waiting Time = <u>(Average No of customers waiting in line</u>)

> λ is a mathematical symbol pronounced Lambda and here refers to <em>Rate of Arrival.</em>

> We have Average Waiting Time = 8

> We have λ (Average Rate of Arrival) = 15 People every hour (that is 60 Minutes)

> that is 15/60= 0.25

Therefore λ = 0.25

> Lets assume that Average No. of Customers Waiting in Line is C

Our formula (by substituting the various factors above now becomes

8 = C/0.25

To get, we cross multiply. So we have:

C = 8 x 0.25

C = 2 thefore the Average No. of Customers waiting according to the single-server queue model given the above conditions is 2.

Cheers!

6 0

3 years ago

Which of the following statements about the price elasticity of demand is correct? The price elasticity of demand for a good mea

cupoosta [38]

Answer:

The answer is: The price elasticity of demand for a good measures the willingness of buyers of the good to buy less of the good as its price increases.

Explanation:

The price elasticity of demand measures the change in the quantity demanded of a product in relation to a change in its price.

The formula for determining the price elasticity of demand (PED) is:

PED = % of the change in Quantity Demanded / % of the change in price

If a good has a high PED (≥ 1) then it is called elastic, which means that any change in the price will change the quantity demanded in a greater proportion. If a good has a low PED (≤ 1) then it is called inelastic, which means that any change in the price will affect the quantity demanded in a smaller proportion.

Usually goods or services considered luxurious (e.g. gourmet cheese), tend to be very elastic (high PED). While products considered basic necessities (e.g. gasoline) tend to be very inelastic (low PED).

7 0

3 years ago

On December 31, 2021, Larry's Used Cars had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $70,000

Fittoniya [83]

Answer:

December 31, 2022 Bad debts $ 2975

Explanation:

On December 31, 2021, Accounts Receivable $70,000

Allowance for Uncollectible Accounts $1,250

During 2022, Bad Debts $2,675

Allowance for Uncollectible Accounts $5,650 at December 31, 2022

Bad debt expense for 2022 would be

December 31, 2021

Allowance for Uncollectible Accounts $1,250

During 2022, Bad Debts $2,675

Required Adjustment $ 1425

December 31, 2022 Bad debts $ 2975

Allowance for Uncollectible Accounts $5,650 adjusted Balance

Allowance for Uncollectible Accounts Written Off $2,675

Required Adjustment $ 2975

5 0

4 years ago

Read 2 more answers

A young couple wants to have a college fund that will pay $35,000 at the end of each half-year for 8 years. (a) If they can inve

Monica [59]

Answer:

$6,046.40

Explanation:

First, find the PV of the $35,000 withdrawals annuity at the time of last investment(end of 18 years). This can be solved with a financial calculator using the following inputs;

Recurring semiannual withdrawals; PMT = 35,000

Total duration of withdrawals; N = 8*2 = 16

Semiannual Interest rate; I/Y = 7%/2 = 3.5%

One time cashflows ; FV = 0

Compute present value; PV(at yr18) = $423,294.088

Next , use the $423,294.088 as your FV goal at the end of year 18.

Future value at yr18; FV = $423,294.088

Total duration of deposits; N = 18*2 = 36

Semiannual Interest rate; I/Y = 7%/2 = 3.5%

One time cashflows ; PV = 0

Compute recurring payment; PMT = 6,046.402

Therefore, they need to invest $6,046.40 at the end of each 6-month period.

7 0

3 years ago

Define credit default swap. ​

Define credit default swap.