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Default swap on air products and chemicals

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In the morning, you purchased $10 million 5 year credit default swap on Air Products and Chemicals (rated A2/A) at a market credit risk premium of 75 basis points or 0.75%. In the afternoon, the company lost a $1 billion pollution lawsuit vs. the Environment Protection Agency. As such, the rating agencies placed the company on watch for a credit downgrade. This development drove the CDS to widen by 15 basis points to 90 basis points. If you sell your position after this announcement, how much did you make or lose on the trade? Please use 0.6% as the discount rate with your solution. Please insert answer as a full whole number without decimal places or dollar sign. As such, $12,888.22 would be 12,888 and -$13,555.87 would be -13,556.

Reference no: EM133111428

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