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Consider an obligor that issues 1-year discount bonds at a continuouslycompounded yield of 4 percent. The continuously-compounded risk-free rate is 100 basis points. What is

Consider an obligor that issues 1-year discount bonds at a continuouslycompounded yield of 4 percent. The continuously-compounded risk-free rate is 100 basis points. What is the credit spread? What is the approximate 1-year risk-neutral default probability with a recovery rate of zero with a recovery rate of 40 percent

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