Consider a 1-year credit default swap (CDS) with $50 Million notional principal and a 3% spread.

a. Identify the cashflow that would take place at the end of the year if there was no credit event for the reference entity for the cds. The buyer/seller (choose 1) of the CDS would receive: $___________

b. Identify the cashflow that would take place if a credit event for the reference entity occurred halfway through the year. As a result of the credit event, the reference entitys bonds are worth $0.20 per $1.00 of par value and the CDS has cash settlement. The buyer/seller (choose 1) of the CDS would receive: $___________