Suppose the hazard rate of the reference entity is 3% per annum for the whole 5-year life of the CDS. The risk free rate is 5%. (a) What are the survival probabilities and unconditional probabilities of de- fault each year? (b) Suppose default will occur halfway through a year, the notional amount is $1, and the recovery rate is 35%. Calculate the CDS spread. Suppose the hazard rate of the reference entity is 3% per annum for the whole 5-year life of the CDS. The risk free rate is 5%. (a) What are the survival probabilities and unconditional probabilities of de- fault each year? (b) Suppose default will occur halfway through a year, the notional amount is $1, and the recovery rate is 35%. Calculate the CDS spread