Standard Basket Swap Calculation: Investor's Payout

If credits 1 and 4 default (in that order) in a standard basket swap, how much will an investor receive?

In a standard basket swap, the investor receives the post-default values of the defaulted credits. If credits 1 and 4 default in that order, what will be the total payout to the investor?

Investor's Payout in Standard Basket Swap:

The investor will receive $104,255 in a standard basket swap if credits 1 and 4 default in that order.

In a standard basket swap, the investor's payout is calculated based on the post-default values of the defaulted credits. Credit 1 has a post-default value of $30,000, and credit 4 has a post-default value of $77,255. As per the specified default order of credit 1 followed by credit 4, the investor will receive the post-default value of credit 1 ($30,000) and the post-default value of credit 4 ($77,255). Therefore, the total amount the investor will receive is $30,000 + $77,255 = $104,255.

By understanding the payout calculation in a standard basket swap, investors can make informed decisions regarding credit default swaps and manage their credit risk effectively.