Assume that all bonds in a portfolio can be assigned to three credit ratings: an AAA grade, a BBB grade and a default rating. Bonds that are in the default ratings never make any further payments and are worthless. Every year some of the bonds change between these bond ratings according to the following transition matrix given below. What are the values of A, B, C, D and E? (Hint, the answers are in terms of 0 and 1)

0

E