1. Suppose a three-year corporate bond provides a coupon of 6.0% per year payable semiannually and has a yield of 5.0% (expressed with semiannual compounding). The yields for all maturities on risk-free bonds is 3.5% per annum (also semiannual compounding). Assume that defaults can take place every six months (immediately before a coupon payment) and that the recovery rate is 38%. Estimate the semiannual default probabilities assuming that the unconditional default probabilities are the same on each possible default date. 1. Suppose a three-year corporate bond provides a coupon of 6.0% per year payable semiannually and has a yield of 5.0% (expressed with semiannual compounding). The yields for all maturities on risk-free bonds is 3.5% per annum (also semiannual compounding). Assume that defaults can take place every six months (immediately before a coupon payment) and that the recovery rate is 38%. Estimate the semiannual default probabilities assuming that the unconditional default probabilities are the same on each possible default date