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Financial Risk Manager Part 1

Financial Risk Manager Part 1

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A risk analyst at a thriving financial institution is concerned about the credit risk linked to a significant loan extended to a large manufacturing company, which is currently witnessing a decline in its market share within its particular industry. In light of this, the analyst is considering the use of various credit risk mitigation techniques, including credit default swaps (CDS), to manage this exposure. Which of the following statements correctly identifies a key benefit of utilizing CDS in this scenario?

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