The Fair Price of a CDS Contract on a Reference

question 11

Multiple Choice

The fair price of a CDS contract on a reference bond is equivalent to that of a spread on a floating-rate bond issued by the same entity as the reference bond and that

• A)Is trading at par.
• B)Has the same maturity as the CDS.
• C)Has the same seniority as the reference bond underlying the CDS.
• D)Has all three properties listed above.

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Definitions:

Costochondral Joint

The articulation between the costal cartilages and the ends of the ribs, contributing to the chest wall's flexibility.

Sternal Symphyses

Joints located where the cartilage connects the rib bones to the sternum, allowing for flexibility and movement during breathing.

Sternocostal Synchrondrosis

Sternocostal synchondrosis refers to the cartilaginous joints between the sternum and the first ribs, which are important for rib cage flexibility and stability.

Costochondral Joint

The region where a rib meets its respective costal cartilage, allowing slight movement and contributing to the chest's elasticity.