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A financial analyst states that the default rate on 6-year AA-rated bonds is 6%, and the default rate on 7-year AA-rated bonds is 13%. The

  1. A financial analyst states that the default rate on 6-year AA-rated bonds is 6%, and the default rate on 7-year AA-rated bonds is 13%. The probability that both bonds will default is 4%.
    1. What is the probability that one of the bonds will default?
    2. What is the probability that neither of the bonds will default?
    3. Given that the 7-year bond has defaulted, what is the probability that 6-year bond will default as well?

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