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Answer: excess of the company's bond yield over the market reference rate.
A basis trade strategy is based on the difference between a company's CDS spread and the excess of the company's bond yield over the market reference rate (i.e., the bond's credit spread). This difference is called the CDS-bond basis. When this basis is positive or negative, it creates arbitrage opportunities between the CDS market and the bond market.
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A basis trade strategy is based on the difference between a company's CDS spread and the:
A
company's bond yield.
B
market reference rate.
C
excess of the company's bond yield over the market reference rate.
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