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Question
A credit forward is a forward agreement that
A. hedges against a decrease in default risk on a loan after the loan rate is determined and the loan issued.
B. hedges against an increase in default risk on a loan before the loan rate is determined and the loan issued.
C. hedges against an increase in default risk on a loan after the loan rate is determined and the loan issued.
D. hedges against a decrease in default risk on a loan before the loan rate is determined and the loan issued.
E. hedges against an increase in default risk on a loan after the loan rate is determined and before the loan is issued.
Answer
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