The type of credit insurance that landed AIG into trouble in 2008 is called
A) insurance rate swaps.
B) monoline insurance.
C) default insurance.
D) credit default swaps.
D
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Let if be the interest rate being paid on a foreign bond, and let i be the interest rate being paid for a domestic bond; let P be the price of the domestic bond and let Pf be the price of the foreign bond. If exchanges rates are fixed and the bonds are equal in terms of risk:
A. if = i. B. the expected return from the foreign bond = the expected return from the domestic bond. C. P = Pf times units of domestic currency/unit of foreign currency. D. all of the answers given are correct.