How much per year will you pay in cds premia

Reference no: EM132194328

Question - 5-year CDX NA IG index is quoted by a market maker as bid 160 bp, ask (offer) 165 bp. This index includes 125 North American investment-grade companies. Suppose you want $800,000 of protection for each company. (Don't forget to show all work)

A) How much per year will you pay in CDS premia?

B) When one of the 125 companies defaults, your annual premium payment will be reduced by how much?

Reference no: EM132194328

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