Bootstrapping default rates from CDS spreads

afterworkguinness

Active Member
Hi,
The equation Malz gives to set the PV of expected value of both legs of a CDS equal to eachother is below. Can someone offer an explain as to why we divide by 4*10^4 ?

Screen_Shot_2015_08_23_at_11_39_55_PM.png


Prior to this, when Malz introduces just the portion to calculate the PV of the expected value of the fixed leg (without accrued payment at default) we divide by 4*10^3.
 
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