Consider the following insurance contract, called a credit default swap (CDS): if a borrower defaults on their debt, the issuer of the CDS will pay the remaining balance to the lender according to the payment schedule. a) If each monthly loan payment is $1,000 (end-of-the-month), the monthly discount rate is 1%, and it is 12 months left before the loan is fully paid off at the moment, what is the PV of these insured cash flows? (7 points) b) If there is a 10% chance that the borrower loses their job and can't pay off the debt, what is the fair value of such an insurance contract? Assume that with 90% probability, nothing happens and the debt is paid off by the borrower. (3 points)