Verify that, if the CDS spread for the example in Tables 25.1 to 25.4 is 100 basis

Chapter 25, Problem 25.14

(choose chapter or problem)

Verify that, if the CDS spread for the example in Tables 25.1 to 25.4 is 100 basis points, the hazard rate must be 1.63% per year. How does the hazard rate change when the recovery rate is 20% instead of 40%? Verify that your answer is consistent with the implied hazard rate being approximately proportional to 1=1 R, where R is the recovery rate.

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