What did Warren Buffett famously refer to credit default swaps as?

Understanding Credit Default Swaps

Interactive Video
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Business
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11th Grade - University
•
Hard

Olivia Brooks
FREE Resource
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10 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Financial tools of growth
Financial weapons of mass destruction
Financial safety nets
Financial stability instruments
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which company is most famously associated with writing many credit default swaps?
Goldman Sachs
Lehman Brothers
JP Morgan
AIG
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Why might investors seek insurance on debt through credit default swaps?
To avoid paying taxes
To protect against defaults on lower-rated debt
To ensure a higher return on investment
To increase their credit rating
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What happens to the likelihood of company defaults when the economy goes bad?
It increases
It becomes unpredictable
It remains the same
It decreases
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is a potential consequence for credit default swap writers when defaults start happening?
They become more profitable
They gain more clients
They can increase their premiums
They have to start paying for the defaults
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What might investors do if they find out their insurance is no longer valid?
Ignore the situation
Seek new insurance
Dump the debt onto the market
Hold onto the debt
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What are side bets in the context of credit default swaps?
Bets on currency fluctuations
Investments in unrelated markets
Bets on the default of companies without holding the debt
Insurance against natural disasters
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