Corporate Finance Assignment/ Professional Essay Writers
Firm A buys CDS from AIG. The notional amount is 1 million USD. The reference entity is firm B. The swap premium is 3%, payable at the end of each quarter. Suppose firm B defaults on January 31. The current price of firm B’s bond is $200 (out of $1,000 par ). The day count convention is act/360.
a. What actions each does the party need to do if cash settlement? For cash flows, please write down the numbers.
b. What actions each does the party need to do if physical settlement? For cash flows, please write down the numbers.
2. Brian just bought an apartment in Manhattan which cost $ 2 million. The down payment was 50%
and the balance of his mortgage was $1 million. The borrowing interest rate is 5%. The term is 15 years.
a. What is his monthly payment?
b. How much is the interest payment for the first month?
c. How much is the remaining principal at the end of the first month?
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