Answer: price

## Explanation **Credit Valuation Adjustment (CVA)** is the adjustment made to the value of a derivative or bond to account for counterparty credit risk. It represents the market value of counterparty credit risk. **Key relationships:** - **CVA and Price**: CVA is subtracted from the risk-free value of a bond to get its fair value. Therefore, as CVA increases, the bond's price decreases. - **CVA and YTM**: As CVA increases and price decreases, the yield to maturity (YTM) increases, not decreases. - **CVA and Credit Risk**: CVA itself is a measure of credit risk, so as CVA increases, it indicates higher credit risk, not lower. **Mathematical relationship:** Fair Value = Risk-Free Value - CVA When CVA increases (due to higher counterparty default risk), the fair value (price) decreases. Therefore, as the credit valuation adjustment increases, there is a decrease in the bond's price.

Author: LeetQuiz Editorial Team