1.The table below shows the dollar amounts of outstanding bonds and corresponding default amounts for every year over the past five years. Note that the default figures are in millions of dollars, while those outstanding are in billions. The outstanding figures reflect default amounts and bond redemptions

What are the annual and cumulative default rates of these bonds? LO 10.10

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Years after issuance Loan type 1 year 2 years 3 years 4 years 5 years Outstanding ($ billion) A-rated: Annual default ($ million) B-rated: Annual default ($ million) 0 0 0 1 2 100 95 93 91 88 0 1 2 3 4 Outstanding ($ billion) 100 94 92 89 85 C-rated: Annual default ($ million) 1 3 5 5 Outstanding ($ billion) 100 16 97 90 85 79 262