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Basic Question 4 of 5
There are two series of outstanding senior bonds issued by a company, which has filed for bankruptcy. Bond A trades at 20% of par, and Bond B trades at 30% of par. Investor X owns $10 million of bond A and investor Y owns $10 million of bond B. They both own $10 million of CDS protection.
B. 25%.
C. 30%.
What is the recovery rate for the CDS contract of X's?
A. 20%.
B. 25%.
C. 30%.
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I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
describe credit events and settlement protocols with respect to CDS;
CFA® 2025 Level II Curriculum, Volume 4, Module 30.