medium · Debt Capital Markets pricing-yields-curve
Which of the following describes the 'negative basis' trade?
- Buy the cash bond and sell CDS protection to maximize credit exposure.
- Buy the cash bond and buy CDS protection to capture a higher bond yield than the CDS cost.
- Sell the cash bond and sell CDS protection to profit from a widening basis.
- Swap a fixed-rate bond for a floating-rate bond when swap spreads are negative.
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