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Assume the Interest Rate in the Market for One-Year Zero-Coupon

Question 17

Multiple Choice

Assume the interest rate in the market for one-year zero-coupon government bonds is i = 7.5% and the rate for one-year zero-coupon grade BB bonds is k = 11.8%.What is the implied probability of default on the corporate bond (round to two decimals) ?


A) 3.85%
B) 4.00%
C) 96.00%
D) 96.15%

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