Exercise . Consider a basket of corporate bonds. Credit default swaps are traded on all individual bonds in the basket and a first-to-default basket CDS is also traded. Explain why the fair premium on the first-to-default basket CDS has to be smaller than the sum of the fair premia on the individual CDSs. Is it true that the fair first-to-default premium has to be smaller than the biggest of the fair CDS premia on the individual bonds?