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Calculate: Suppose we estimate that the province of Alberta has an 8% chance of going bankrupt within the next year and defaulting on its debt,

Calculate: Suppose we estimate that the province of Alberta has an 8% chance of going bankrupt within the next year and defaulting on its debt, in which case bondholders will receive nothing. If the Government of Canada debt, which has a 0% chance of default, trades at a yield of 2%, what yield should Alberta debt trade at?

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