A company buys a credit default swap (CDS) that offers protection on €280000 of corporate bonds ay paying 38 basis points of the principal to the seller every four months.  Default occurs after four years and one month, after which the bonds are worth 28% of their face value.

Ignoring interest rates, the net amount paid by the seller to the buyer over the lifetime of the CDS is € ___________

Answer rating: 100% (QA)

To calculate the net amount paid by the seller to the buyer over the lifetime of the credit default ... View the full answer