The credit default swap on a three-year bond is trading at a spread (premium) of 1%. If
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The credit default swap on a three-year bond is trading at a spread (premium) of 1%. If the credit spread on the bond is at 1.1%, suggest a trade to take advantage of this. Why do you think there might be a difference in spreads on the CDS and the bond?
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In this case the Credit Default Swap CDS is cheaper than the bond spread A CDS is a financial deriva...View the full answer
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