The Fair Price of a CDS Contract on a Reference

question 12

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:

Bronze Casting

A process used in sculpture making where molten bronze is poured into a mold and allowed to harden into shapes, often used for creating detailed and durable artworks.

Propylaia

Greek, "gates."

Acropolis

Greek, “high city.” In ancient Greece, usually the site of the city’s most important temple(s).

Portraiture

The art of creating portraits, which are representations of individuals, typically focusing on the face and expression.