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

question 37

Multiple Choice

Assume the interest rate in the market for one-year zero-coupon government bonds is i = 8% and the rate for one-year zero-coupon grade BBB bonds is k = 10.2%.What is the implied probability of repayment on the corporate bond (round to two decimals) ?

• A)2.00%
• B)2.04%
• C)97.96%
• D)98.00%

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