In a one-year forward contract on a CDS that will last five years, what happens if there is a default during the first year? choose one)

Name: In a one-year forward contract on a CDS that will last five years, what happens if there is a default during the first year? choose one)
Brand: Quizplus
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Question

Quizplus · Accepted Answer

If there is a default during the first year, the forward contract ceases to exist because the underlying CDS contract is not yet active, and the forward contract is contingent on the CDS being in effect.

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