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Bonds issued by Terminal, Co. are currently trading at a credit spread of 313 bps relative to same-maturity treasury securities. A portfolio manager, upon

 

Bonds issued by Terminal, Co. are currently trading at a credit spread of 313 bps relative to same-maturity treasury securities. A portfolio manager, upon analyzing the company, believes the spread will decrease in the next year, and enters a short position in a 1 year credit spread forward contract with the current spread as the contracted spread, notional amount of $11 million, and a risk factor of 3.19. What is the maximum payoff to the portfolio manager from this position?

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