Credit derivatives are used to ________
A) reduce a lender's exposure to risk
B) link liabilities to a federal agency
C) hedge against exchange rate shifts
D) link assets to a federal agency
E) avoid obligations to buy or sell assets
Answer: A
Explanation: Credit derivatives are used to reduce a lender's exposure to credit risk. The most notable type is the credit default swap, which works much like an insurance policy.
Business
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