Suppose an investor wishes to sell protection on $10 million of the CDX Index where the fixed spread is 100 bps.If the current spread on the index is 150 bps,then the investor will receive

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The investor is selling protection at a fixed spread of 100 bps while the current spread is 150 bps. The difference of 50 bps represents the additional spread the investor will receive over the life of the contract. This is typically received as an upfront payment calculated as the present value of the difference over the contract's life. Additionally, the fixed spread of 100 bps on $10 million equates to an annual payment of $100,000, or $25,000 quarterly.

Suppose an Investor Wishes to Sell Protection on $10 Million