If the rate on one-year T-bills currently is 6 percent, what is the repay- ment probability for

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If the rate on one-year T-bills currently is 6 percent, what is the repay- ment probability for each of the following two securities? Assume that if the loan is defaulted, no payments are expected. What is the market- determined risk premium for the corresponding probability of default for each security?

a. One-year AA-rated bond yielding 9.5 percent.

b. One-year BB-rated bond yielding 13.5 percent.

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