XYZ Company files for bankruptcy, triggering payments on various CDS contracts written on its obligations. It has two series of senior unsecured bonds outstanding:

• Bond A trades at 25% of par, and
• Bond B trades at 55% of par.

The CDS protection on bond A was negotiated at 250 bps credit spread, and the one on bond B at 175 bps.

• Audrey owns $7,000,000 of Bond A and owns $7,000,000 of CDS protection.
• Brendan owns $7,000,000 of Bond B and owns $7,000,000 of CDS protection.

a. What was the amount of the quarterly payment made by Audrey before the bankruptcy?

$

Round your answer to the nearest dollar.

b. Which of the following statements about the recovery rate is true?