Assume That F₁ = 13

question 37

Multiple Choice

Assume that f₁ = 13.50 per cent and c₁ = 17.40 per cent. Which of the following statements is true?

• A) The expected default probability of repayment is 96.10 per cent.
• B) The expected probability of repayment is 3.32 per cent.
• C) The one-year rate expected on corporate securities one year into the future is 13.50 per cent.
• D) The current one-year rate on corporate securities is 17.40 per cent.

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