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Your friend asks you (1) how a rural internet and telecommunications company like Windstream, not directly involved in the CDS market, could be hurt by

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Your friend asks you (1) how a rural internet and telecommunications company like Windstream, not directly involved in the CDS market, could be hurt by the credit default swap transactions of its creditor, Aurelius Capital Management, a hedge fund and (2) why credit default swap transactions could pose potential threat to the U.S. financial system. ? (please answer 1 and 2 separately.)

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