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Part I
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Financial Markets and Products
Financial Markets and Products
Medium
Which of the following best describes the key difference between a credit-linked note (CLN) and a total return swap (TRS)?
A
A CLN is a funded instrument where the investor provides upfront cash, while a TRS is an unfunded derivative with no initial cash exchange
B
A CLN transfers only interest rate risk, while a TRS transfers only credit risk
C
A CLN is always exchange-traded, while a TRS is always over-the-counter
D
A CLN provides the investor with leveraged exposure, while a TRS does not
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Tags
#credit-linked-note
#total-return-swap
#funded-vs-unfunded
#credit-derivatives
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FRM Part I — Financial Markets and Products Practice Question | AcadiFi | AcadiFi