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QUESTION 16 An investor notes that a corporate bond currently yields 5% and has a comparable CDS contract with a premium of 4%. The investor's

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QUESTION 16 An investor notes that a corporate bond currently yields 5% and has a comparable CDS contract with a premium of 4%. The investor's cost of borrowing is 0.75%. In order to execute a basis trade, the investor should: a) Buy the bond and sell the CDS. b) Buy the bond and buy the CDS. c) Sell the bond and buy the CDS. OB

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