Corporate Finance Assignment/ Professional Essay Writers
May 8th, 2020
1. 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. Get Finance Help Today