Consider the following transition matrix (simplified but based on actual bond ratings systems) showing the historical probability that a corporate bond with a given rating on will have the same or a different credit rating exactly one year later.

Assume a bond starts in the AAA credit class.

What is its expected distribution across the credit classes two years later?

What is its expected distribution across the credit classes three years later?

Consider the following transition matrix (simplified but based on actual bond ratings systems) showing the historical probability that a corporate bond with a given rating on will have the same or a different credit rating exactly one year later. | B Bond Credit Ratings AAA AAA A 90% In Default 1% 1% A B 10% 2% 1% 0% 5% 75% 8% 2% 0% 3% 8% 82% 7% 1% 3% 5% 72% 2% 3% 18% 87% C In Default 12% Assume a bond starts in the AAA credit class. What is its expected distribution across the credit classes two years later? What is its expected distribution across the credit classes three years later? Consider the following transition matrix (simplified but based on actual bond ratings systems) showing the historical probability that a corporate bond with a given rating on will have the same or a different credit rating exactly one year later. | B Bond Credit Ratings AAA AAA A 90% In Default 1% 1% A B 10% 2% 1% 0% 5% 75% 8% 2% 0% 3% 8% 82% 7% 1% 3% 5% 72% 2% 3% 18% 87% C In Default 12% Assume a bond starts in the AAA credit class. What is its expected distribution across the credit classes two years later? What is its expected distribution across the credit classes three years later