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Let us assume that the one-year risk-free interest rate is 1,6%. Now imagine that the yield of a corporate bond maturing one year from today

Let us assume that the one-year risk-free interest rate is 1,6%. Now imagine that the yield of a corporate bond maturing one year from today is 7,3%. The current market price of the corporate bond is 159,11 EUR.

Please calculate the probability of default of the corporate bond i.e. the likelihood that the corporation will default in one year.

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