In a CDS with a Notional Principal of $100 Million

question 10

Multiple Choice

In a CDS with a notional principal of $100 million the reference entity defaults.What is the payoff to the buyer of protection when the recovery rate is 30%?

• A) $100 million
• B) $30 million
• C) $130 million
• D) $70 million

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Definitions:

Small Intestine

A long, coiled part of the digestive system where most of the digestion and absorption of nutrients takes place.

Birds

A class of warm-blooded egg-laying vertebrates characterized by feathers, beaks, and typically the ability to fly.

Seeds

The reproductive unit of flowering plants, capable of developing into another such plant.

Thick Beaks

A characteristic of some birds that have evolved robust, heavy beaks to crush or crack hard food sources.