CFA Level 2 - Derivative Investments Session 17-Reading 65 Using Credit Derivatives to Enhance Return and M 1. Which of the following entities is the fastest growing segment of the creditderivatives market?A) Commercial banks. B) Hedge funds. C) Investment Banks.Explanation: There are hedge funds that specialize in the trading of creditderivatives. In their pursuit of relative value opportunities, they have becomequite active and are important providers of liquidity to the market. Hedgefunds represent the fastest growing segment of the credit derivatives market. 2. Which of the following is least likely a stated use of credit derivatives bycommercial banks and corporations? A) Speculation. B) Income.C) To satisfy regulatory standards.Explanation: Commercial banks use credit derivatives to hedge their exposuresand to satisfy regulators. Corporations use credit derivatives for hedging andincome enhancement. 3. Which of the following entities is the largest market participant in the creditderivatives market?A) Hedge funds.B) Investment Banks. C) Commercial banks. Explanation: Commercial banks use credit derivatives to hedge their exposuresand to satisfy regulators. They are the largest participant in the market, with ashare of 35-40%.