What is coupon impact of using a more risky reference entity

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Reference no: EM131947965

A. What is the coupon impact of using a more risky reference entity? (high? lower? no change? Why?)

B. If the CLN carries a floating coupon (adjusts each quarter to changes in interest rates in general) what impact is there on the initial hedges and on risks? Presume that the buyer of the CLN only wants credit risk.

Reference no: EM131947965

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