# Basic Q simple math

If CDS price change per 100 face value goes from 103 to 101 due to spread widening, book say contract price changes by -2. But they say mark-to-market gain is 2%. To find change we use relative to face value of 100 to get 2%.

We do not use 103 price initially? I would have found mark-to-market gain of (103 - 101) / 103.

Try to understand basics. Help appreciate.

Greetings friend! A brief disclaimer - I am not sure I understand your question wording but I will try to respond as best I canâ€¦

The contract price changes by -2 because a CDS investor (the buyer of protection) now can pay â€ś2 lessâ€ť to buy the protection than they could previously.

For CDS youâ€™re generally looking at things in terms of notional (par) value. The CDS is an OTC instrument thatâ€™s agreed bi-laterally between a buyer and seller based on some expected risk and the par value. So thatâ€™s why they seem to be using 100 and not 103 here.

Cheers - good luck - you got this

thank you. That help much.

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