The maximum benefits to the buyer of a credit-linked note (CLN) accrue when: A. there is a small credit downgrade. B. there is a large credit downgrade. C. there is no credit downgrade. D. there is a default.
The benefit to the CLN buyer is that the buyer earns a high return if there is no downgrade or default. The buyer’s primary risk is that there is a downgrade or default and the buyer earns a lower return.
