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1. Assume that if the loan is defaulted, no payments are expected. If the rate on one-year Treasury strips currently is 6 percent, a. What

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1. Assume that if the loan is defaulted, no payments are expected. If the rate on one-year Treasury strips currently is 6 percent, a. What is the repayment probability for the following two security? One-year AA-rated zero coupon bond yielding 9.5 percent. b. What is the market-determined risk premium for the corresponding probability of default for this security

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