alleryStart learning →Which is a key difference between a CDS and insurance?
ACDS pays only actual loss
BCDS needs an actuary to set premiums
CCDS is always regulated as insurance
DCDS holder need not own the debt
Answer & Solution
Correct answer: D. CDS holder need not own the debt
Insurance indemnifies actual loss on an insured asset, while a CDS buyer need not own the security or suffer a loss.
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