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:

Compression

The act of applying pressure to something, thereby reducing its volume or changing its shape.

Intervertebral Discs

Structures located between the vertebrae that act as shock absorbers and allow for flexibility in the spine.

Costal Cartilages

Bars of hyaline cartilage that connect the ribs to the sternum, contributing to the elasticity and expansion capability of the rib cage.

Adult Skeleton

The fully developed, mature skeleton of an adult human, comprising 206 bones that provide structure, protection, and leverage for movement.