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Basic Question 3 of 5
If an investor expects the credit curve will become steeper, he will likely take a ______ position in a long-term CDS and take a ______ in a short-term CDS.
User Contributed Comments 1
| User | Comment |
|---|---|
| davidt87 | why? doesn't the buyer of a CDS benefit from a worsening of the spread? shouldnt they go long long-term given they expect it will increase relative to short term? |
I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
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.