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A pension fund has decided to buy a credit default swap for ABC bonds with a par value of $5 million. The CDS has an

A pension fund has decided to buy a credit default swap for ABC bonds with a par value of $5 million. The CDS has an annual swap premium of 250bp. What is the quarterly payment?

You purchase one IBM July 125 call contract for a premium $7. You hold the option until the expiration date, when IBM stock sells for $127 per share. You will realize a ______ on the investment (assume the option contract is for 100 shares).

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