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