The Following Is Information on Current Spot and Forward Term

question 96

Multiple Choice

The following is information on current spot and forward term structures (assume the corporate debt pays interest annually) :

-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.

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Definitions:

Labor Hours Demanded

The total number of working hours that employers are willing to hire based on the current wage level.

Widget Industry

A hypothetical or generic term often used to refer to any industry or sector producing a common, unspecified product for illustrative purposes.

AFL-CIO

The American Federation of Labor and Congress of Industrial Organizations, a federation of unions that represents workers.

Manufacturing Labor Market

The sector of the labor market focused on jobs involved in the production and fabrication of goods.