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Assume you hold the long position (protection buyer) in an existing CDSwith 2-yearsremaining to maturity. The spread on the existing CDS is 2%. Calculate the

Assume you hold the long position (protection buyer) in an existing CDSwith 2-yearsremaining to maturity. The spread on the existing CDS is 2%. Calculate the value of the existing CDS, if new 2- year CDS contracts are tradingwith a spread of 3%. Assume a 4% discountrate, and $1.00 notional principal.

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