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Problem 4 ( 1 0 pt ) Suppose that a 5 Y corporate bond trades at an yield 2 5 0 basis points above the

Problem 4(10pt)
Suppose that a 5Y corporate bond trades at an yield 250 basis points above the yield of a treasury bond with the same maturity and coupon. The recovery rate is R=40%.
i) Compute the is the hazard rate for default implied by the bond price? What is the implied probability of default in 5 years of the bond issuer?
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