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Using the Term Structure of Default Probabilities, the Implied Default

Question 121

Multiple Choice

Using the term structure of default probabilities, the implied default probability for BBB corporate debt during the second year is

A) 4.20 percent.
B) 98.0 percent.
C) 2.35 percent.
D) 2.71 percent.
E) 3.88 percent. [Refer to: 10-114]

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