Suppose That the Cumulative Probability of a Company Defaulting by Years

question 17

Multiple Choice

Suppose that the cumulative probability of a company defaulting by years one,two,three and four are 3%,6.5%,10%,and 14.5%,respectively.What is the probability of default in the fourth year conditional on no earlier default?

• A) 4.5%
• B) 5.0%
• C) 5.5%
• D) 6.0%

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Definitions:

Self-awareness

The awareness of an individual's own personality, emotions, intentions, and wishes.

Suicide

The act of deliberately taking one's own life, often associated with factors such as mental illness, severe stress, or a sense of hopelessness.

Acronym TOTE

Stands for Test-Operate-Test-Exit, a model in psychological theory relating to processes of decision making and problem solving.

Goal Shielding

The process of protecting one's focus on achieving a particular goal by resisting distractions and unrelated objectives.