1.(10) The bond equivalent yields for Australian Treasury Bonds and A-rated corporate bonds with maturities of 93 and 175 days are given below:

What are the implied forward rates for both an 82-day Treasury and an 82-day A-rated bond beginning in 93 days? Use daily compounding on a 365-
day year basis.
What is the implied probability of default on A-rated bonds over the next 93 days? Over 175 days?
What is the implied default probability on an 82-day A-rated bond to be issued in 93 days? LO 10.10

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Treasury strip A-rated corporate Spread 93 days 8.07 % 8.42 0.35 175 days 8.11% 8.66 0.55