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You think the credit quality of RST bonds will decline. To trade on this strategy do you pay or receive on a CDS contract? RST
You think the credit quality of RST bonds will decline. To trade on this strategy do you pay or receive on a CDS contract? RST 5 year bonds currently are T+ 120 and treasury rates are 2%. CDS contracts for RST are +110. If you enter into the CDS for $10m and the contract moves to T+ 130 after one year. What is your gain?
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