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Basic Question 7 of 9
Assume a swap is written on a bond with a $100 million par value and a 5-year maturity. The swap premium is 100 bps annually. Which statement is true?
B. The protection buyer will pay the seller $200,000 per year.
C. The protection seller will pay the buyer $1 million per year.
A. The protection buyer will pay the seller $1 million per year.
B. The protection buyer will pay the seller $200,000 per year.
C. The protection seller will pay the buyer $1 million per year.
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I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
describe credit default swaps (CDS), single-name and index CDS, and the parameters that define a given CDS product;
CFA® 2025 Level II Curriculum, Volume 4, Module 30.