Please ASAP

A zero recovery CDS is a contract that works exactly like a standard CDS contract, with the following exception - in the credit event, the buyer of protection receives a payout equal to the Notional. You have a Client who wants to buy a 5yr zero recovery Brazil CDS that will pay out exactly $10mn to the Client in a credit event of Brazil. You also received the following executable bid/offer levels from Bank A. 1) 5yr Brazil CDS bid/offer of 3.00%/3.20% 2) 5yr Brazil Recovery Lock bid/offer of 20%/ 30% (a) Describe how you would hedge the 5yr Zero Recovery Brazil CDS contract. Please include details of the hedges that you trade with Bank A, including the notional of hedges and trading levels (taking into adcount Bank A's bid/offer). (b) What is the minimum premium that you should charge the Client? Please express the premium as a % of the Notional ($10mn). 2. Is the valuation of 1.6 times book value that Newbridge pays appropriate? What is an appropriate valuation range? The following is a list of things that you should consider when making your judgement. 1) Newbridge gets non-tradable legal person shares but it gets a significant controlling stake and the right to appoint the CEO and eight of the fifteen board members. 2) Four Chinese banks had received investments from foreign banks or investors since 1999. Their multiples can provide some guidance but, at the same time, each deal has their specific characteristics. 3) The valuation multiples in Exhibit 13.Study Questions for Ito's Dilemma Case 1. Using the Black-Scholes pricing function in Excel, compute an option value for each strike price and maturity date in case Exhibit 2. For simplicity, assume zero dividend yield. Also, use Louise Ito's volatility estimates, provided in case Exhibit 1. 2. Does the model yield logical estimates with respect to intrinsic value and time-to- maturity? What happens to the option premiums as you change the volatility? Can you explain why volatility affects prices in such a manner? 3. How do your estimates compare with the actual quoted prices? Can you explain the differences? Assuming your prices are correct, which options would you buy or sell? 4. Are there any problems with the way Ito estimated the volatility numbers? Can you think of another way to estimate volatility that might yield estimates closer to the actual quotes? 5. Using the Black-Scholes pricing function in Excel, calculate how sensitive IBM's March 110 call price is to changes in stock price. How much does the call price vary for $0.50 changes in IBM share price when the option is at the money (assume stock price=$110), in the money (assume stock price=$115), and out of the money (assume stock price=$105)? What does this sensitivity analysis tell you