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7. Suppose the hazard rate of the reference entity is 3% per annum for the Whole 5-year life of the CBS. The risk free rate

7. Suppose the hazard rate of the reference entity is 3% per annum for the Whole 5-year life of the CBS. The risk free rate is 5%. What are the survival prob- abilities and unconditional probabilities of default. Suppose default Will occur halfway through a year, the notional amount is $1, and the recovery rate is 35%. Calculate the CDS spread

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