In a CDS contract that will last five years, what happens if there is a default during the first year?

Select one:

a. There is an accrual payment to the CDS seller

b. There is a payoff to the CDS buyer (from the seller) and an accrual payment to the CDS seller (from the buyer)

c. The contract ceases to exist without any payment

d. There is a payoff to the CDS buyer