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Consider a Credit Default Swap with maturity 2 years, paying a premium with semi-annual frequency. Assume that defaults can occur only at times 0.25 years,

Consider a Credit Default Swap with maturity 2 years, paying a premium with semi-annual frequency. Assume that defaults can occur only at times 0.25 years, 0.75 years, 1.25 years and 1.75 years. The CDS spread is 255 basis points. Assume that the risk-free interest rate is 2.5% (with continuous compounding) and the recovery rate is R=40%.

What is the hazard rate of the reference name? Assume a constant hazard rate for the entire maturity of the CDS.

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