Please explain the answer to me. Thank you very much!

1. Consider a CDS on Lehman Brothers default event. Given todays market conditions you know that the present value of expected premium payments 6.0250*s, the present value of expected accrual payments is 0.0515*s and the present value of expected payoff is 0.1398. All measured per $1 of notional principal. You also know that Argo hedge fund bought this CDS on Lehman Brothers default from AIG one week ago with contractual rate of X basis points per year. Given this information the breakeven spread (i.e. the value of s) is _________ and todays value of the CDS contract to AIG is negative if the value of s is _______ than X.

1. 230 basis points; greater
2. 43 basis points; smaller
3. 234 basis points; greater
4. 230 basis points; smaller
5. 43 basis points; greater

2. In a CDS the accrual payment is a payment made by CDS _____ to CDS _______ and occurs when the _______ defaults

1. buyer; seller; buyer
2. seller; buyer; reference entity
3. buyer; seller; reference entity
4. seller; buyer; buyer
5. buyer; seller; seller

3. Consider a FRA where IBM agrees to borrow $100 mil. from a dealer for 3 months starting in 5 years. The contractual FRA rate is 5.5% per annum. Assume that in 5 years the actual 3-month LIBOR is 4.5% per annum. The FRA is settled when ________ pays _______ the amount of _________.

1. IBM; dealer; $250,000
2. dealer; IBM; $250,000
3. IBM; dealer; $247,219
4. dealer; IBM; $247,219
5. IBM; dealer; $244,499