Company: MYI
Filing Date: 2025-07-16
Form Type: N-14 8C
Source: 0001193125-25-159991
Chunk: 225

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-07-16
Form: N-14 8C
Chunk 225
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 party to such a transaction, MVF will have contractual remedies pursuant to the agreements related to the transaction. The swap market has grown substantially in recent years with a
large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. Caps and floors are more recent innovations for which standardized documentation has not yet been developed and,
accordingly, they are less liquid than swaps.

Credit Default Swap Agreements. MVF may enter into credit default swap agreements
for hedging purposes or to seek to increase its return. The credit default swap agreement may have as reference obligations one or more securities that are not currently held by MVF. The protection “buyer” in a credit default contract may
be obligated to pay the protection “seller” an upfront or a periodic stream of payments over the term of the contract, provided that no credit event on a reference obligation has occurred. If a credit event occurs, the seller generally
must pay the buyer the “par value” (full notional value) of the swap in exchange for an equal face amount of deliverable obligations of the reference entity described in the swap, or the seller may be required to deliver the related net
cash amount (the difference between the market value of the reference obligation and its par value), if the swap is cash settled. MVF may be either the buyer or seller in the transaction. If MVF is a buyer and no credit event occurs, MVF may recover
nothing if the swap is held through its termination date. However, if a credit event occurs, the buyer generally may elect to receive the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the
reference entity whose value may have significantly decreased. As a seller, MVF generally receives an upfront payment or a fixed rate of income throughout the term of the swap, which typically is between six (6) months and three years, provided
that there is no credit event. If a credit event occurs, generally the seller must pay the buyer the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference entity whose value may have
significantly decreased. As the seller, MVF would effectively add leverage to its portfolio because, in addition to its total net assets, MVF would be subject to investment exposure on the notional amount of the swap.

Credit default swap agreements involve greater risks than if MVF had invested in the reference obligation directly since, in addition to
general market risks, credit