What annual payment does buyer of credit protection

Assignment Help Financial Management

Reference no: EM131964234

A. The CDS spread on Vox Corp is 350 basis points. What annual payment does a buyer of credit protection have to pay to insure $5 million of Vox Corp bonds?

B. In the event of default, the recovery rate is 50%. If investors are risk-neutral, what is the probability of default per year implied by the spread?

Reference no: EM131964234

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