quiz - total return credit swap

Regarding a total return credit swap which of the following statements is least accurate? A) The total return payer receives an amount based on a specified reference at the swap’s settlement dates. B) The swap can hedge many types of risk with a single contract. C) The total return payer owns the underlying assets.

A

C? The total return receiver should be holding the underlier?

Correct answer is C. A) is acurate because “The total return payer receives an amount based on a specified reference at the swap’s settlement dates” is exactly how the total return swap works. B) is acurate because the swap can hedge currency, credit, and a host of other risks with a single contract. C) is not acurate because the total return payer does not have to own the underlying assets. If an investor enters into a total return swap as the payer without owning the underlying asset, he is effectively shorting the asset.

I think C because you don’t need to hold the underlying asset.

C because first two seem correct to me:)

i’m retarded. i didn’t see the LEAST and read A and stopped there. reading is hard sometimes.