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Imagine that you have two bonds that you are considering pooling and tranching into a CDO. Each bond pays out $1,000 at the end of

Imagine that you have two bonds that you are considering pooling and tranching into a CDO. Each bond pays out $1,000 at the end of the period and each bond will default 20% of the time. In case of default, each bond pays nothing. The bond defaults are independent. The default probability of the junior tranche from CDO is ____.

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