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Question 5 (i) Explain with your own numerical example what is meant by a Sovereign Credit Default Swap (CDS). (ii) If the perceived risk of

Question 5

(i) Explain with your own numerical example what is meant by a Sovereign Credit Default Swap (CDS).

(ii) If the perceived risk of a default by Greece falls due to a major credit rating upgrade from CCC to BBB+ what is likely to happen to its quarterly CDS premiums. Explain using your own numerical example.

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