The Compensation from a CDS Can Come from

The compensation from a CDS can come from

A) the CDS holder delivering the defaulted bond to the CDS issuer in return for the bond's par value.
B) the CDS issuer paying the swap holder the difference between the par value of the bond and the bond's market price.
C) the federal government paying off on the insurance claim.
D) the CDS holder delivering the defaulted bond to the CDS issuer in return for the bond's par value and the CDS issuer paying the swap holder the difference between the par value of the bond and the bond's market price.
E) None of the options

Correct Answer:

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