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A financial analyst esitmates that the probability of default on a ten-year bond which is rated AAA is 9%, while the probability of default on
A financial analyst esitmates that the probability of default on a ten-year bond which is rated AAA is 9%, while the probability of default on a ten-year bon which is rated BBB is 19%. The probability that they will both default is 5%. Let's call "default of the AAA bond" event A, and "default of the BBB bond" event B. What is the probabiilty of the AAA-bond not defaulting? O A. 0.91 OB. 0.09 O C. 1.00 OD. 0.81 Given that the AAA-bond defaults, what is the probability that the BBB-bond also defaults? In other words, what is Pr(BIA)? O A. 1.00 OB. 0.12 OC. 0.85 OD. 0.56 What is the probability that at least one of the bonds defaults? n
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