If the CDS Spread for a Regular 5-Year CDS Is

question 11

Multiple Choice

If the CDS spread for a regular 5-year CDS is 120 basis points,what is the CDS spread for a 5-year binary CDS on the same underlying reference entity? Assume a recovery rate of 40%.

• A) 48 basis points
• B) 72 basis points
• C) 200 basis points
• D) 300 basis points

---

Definitions:

Deferred Profit-Sharing Plans

A type of profit-sharing plan where contributions are deferred and placed in a trust for the employee until a set time, often retirement.

Quasi Pension Plans

Programs that mimic traditional pension plans but typically offer more flexibility and are often funded by the employees, sometimes with employer contributions.

Monetary Reward

Financial compensation given to employees as a form of acknowledgment for their work performance or achievement.

Kilograms

A unit of mass in the metric system, equivalent to one thousand grams.