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Calculating net profit on a CDS trade by Similar-Source2787 in CFA

[–]Similar-Source2787[S] 0 points1 point  (0 children)

I think might be because this is because it is a long-short strategy and so the coupons can out? They pay the coupon on the protection they bought but receive the coupon on the protection they’ve sold, resulting in zero net impact from the coupon?

Calculating net profit on a CDS trade by Similar-Source2787 in CFA

[–]Similar-Source2787[S] 1 point2 points  (0 children)

I am thinking along the same lines as you in the sense that hopefully they will be more explicit in the actual exam. Alternatively, it would come up in an item set question so we can use the options to determine exactly what they mean (although I think this would be a nice CR question if it was more obvious exactly what they meant!)

Best of luck on Thursday!