A Hazard Rate Is 1% Per Annum

question 2

Multiple Choice

A hazard rate is 1% per annum.What is the probability of a default during the first two years?

• A) 2.00%
• B) 2.02%
• C) 1.98%
• D) 1.96%

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Definitions:

Concentration Ratio

is a measure used to determine the market share of the largest firms within an industry, indicating the degree of market control and competition.

Herfindahl Index

An index reflecting the scale of companies compared to the entire sector and a sign of the level of competitive activity present.

Pure Monopolist

A market structure where a single firm is the sole producer and seller of a product or service without close substitutes, giving it significant market power.

Market Shares

The percentage of an industry's total sales that is earned by a particular company over a specified time period, indicating the company's size or presence in the market.