Consider a $1$ year zero coupon risky bond that has a rate of $8\%$ per year.

The risk free rate is $4\%$ per year.

What is the $1-$year probability of default for the risky bond?

$1\mathrm{.}3\%$

$5\mathrm{.}2\%$

$4\%$

$3\mathrm{.}7\%$