In a Credit Default Swap, the protection seller buys the reference bond at its face value from the protection buyer in case of the default event of the issuer of the reference bond. What option position of the following is most similar with the protection seller's position? → (1) long call; (2) shot call; (3) long put; (4) short put; [All options are written on the reference bond.]
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
![In a Credit Default Swap, the protection seller buys the reference bond at its face value from the protection buyer in case of the
default event of the issuer of the reference bond. What option position of the following is most similar with the protection
seller's position? → (1) long call; (2) shot call; (3) long put; (4) short put; [All options are written on the reference bond.]
When a counon bond navs conon at the same rate as its market vield the counon bond is priced at nar That is its market price](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F831c7cfb-6d67-46c3-b569-1b4540189250%2Fa1c59b2b-058f-43ee-b32d-44363a11fc98%2F0toagpa_processed.png&w=3840&q=75)
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