Question: SET UP A SMART XL SIMULATION FOR CDS BELOW. WHEN I CHANGE THE VALUE OF THE INPUT VARIABLES, XL WILL AUTOMATICALLYRECOMPUTE THE CDS SPREAD CORRECTLY

SET UP A SMART XL SIMULATION FOR CDS BELOW. WHEN I CHANGE THE VALUE OF THE INPUT VARIABLES, XL WILL AUTOMATICALLYRECOMPUTE THE CDS SPREAD CORRECTLY TO THE 4TH DECIMAL POINT.

The Hazard rate = conditional probability for a reference entity is 2.95% each year.

Assume payments are made annually in arrears.

Assume that default, if it happens, always happens exactly halfway through a year.

Assume that the expected recovery rate is 24%.

Assume that the Treasury-Spot curve is flat at 6% with continuous compounding.

Assume Notional Principal = $1

Compute the 5-year CDS spread.

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