four year corporate bond provides a coupon of 4% per year payable semiannually and s a yield of 5% expressed with continuous compounding. The risk-free yield curve is t at 3% with continuous compounding. Assume that defaults can take place at the end 5, A ha fla r (immediately before a coupon or principal payment) and the recovery rate of each yea is 30%. Estimate the risk neutral default probability on the assumptions that it is the same each year using the approach in table 16.3