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Basic Question 2 of 5

The strategy to bet that the credit position of one reference entity will improve relative to that of another is called:

A. long/short trade.
B. curve trade.
C. basis trade.

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Edward Liu

Edward Liu

Learning Outcome Statements

describe the use of CDS to manage credit exposures and to express views regarding changes in shape and/or level of the credit curve;

describe the use of CDS to take advantage of valuation disparities among separate markets, such as bonds, loans, equities, and equity-linked instruments.

CFA® 2025 Level II Curriculum, Volume 4, Module 30.