A portfolio manager responsible for a $$500$ million par value bond portfolio purchases a credit default swap $($CDS$)$ from an investment bank. The annual CDS premium is equal to $96$ basis points on $$500$ million of notional value. The swap runs from January $1$ to December $31$ and renews automatically at the beginning of each year. The CDS terminates immediately upon a qualifying "triggering" event, upon which all balances due under the CDS are settled. A qualifying triggering event occurs on June $30$ in the first year, after which the bonds are deemed to be worth $60\%$ of their par value. What is the cost of the CDS to the investment bank, net of the CDS premium?

A portfolio manager responsible for a $$500$ million par value bond portfolio purchases a credit default swap $($CDS$)$ from an investment bank. The annual CDS premium is equal to $96$ basis points on $$500$ million of notional value. The swap runs from January $1$ to December $31$ and renews automatically at the beginning of each year. The CDS terminates immediately upon a qualifying "triggering" event, upon which all balances due under the CDS are settled. A qualifying triggering event occurs on June $30$ in the first year, after which the bonds are deemed to be worth $60\%$ of their par value. What is the cost of the CDS to the investment bank, net of the CDS premium?

$$195,200,000$

$$197,600,000$

$$176,000,000$

None of the above.