In a one-year forward contract on a CDS that will last five years,what usually happens if there is a default during the first year?
A) There is a payoff to the forward protection buyer at the time of default
B) There is a payoff to the forward protection buyer at the end of one year
C) There is a payoff to the forward protection buyer at the end of six years
D) The contract ceases to exist

Question

Quizplus · Accepted Answer

A forward CDS contract ceases to exist if there is a default before the maturity of the forward contract.

In a One-Year Forward Contract on a CDS That Will