What authoritative source is used for defining a “credit event”?
Answer to relevant QuestionsWhat is the cash flow of a 10-year bond that pays coupon interest semiannually, has a coupon rate of 7%, and has a par value of $100,000? Explain whether you agree or disagree with the following statement: “Because my bond is guaranteed by an insurance company, I have eliminated credit risk.” (a) What is the reference rate? (b) What is the quoted margin? (c) Suppose that on a coupon reset date that 1-month LIBOR is 2.8%. What will the coupon rate be for the period? What is the “dirty” price of a bond? Why is “restructuring” the most controversial credit event?
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