Question 2 Suppose yield curve is given by the following table ly 2y 3y 5% 7% 6% What is the forward rate from year 1 to year 2, f1,2? What is the forward rate from year 1 to year 3, f1,3? Question 3 Suppose the matrix of transition probabilities is given by: A B Default 0 A B 50% 48% 50% 45% Default 2% 5% 0 100% What is the 2-year default probability of a bond with an initial rating of B?

Question 2 Suppose yield curve is given by the following table What is the forward rate from year 1 to year 2,f1,2 ? What is the forward rate from year 1 to year 3,f1,3 ? Question 3 Suppose the matrix of transition probabilities is given by: What is the 2-year default probability of a bond with an initial rating of B? Question 2 Suppose yield curve is given by the following table What is the forward rate from year 1 to year 2,f1,2 ? What is the forward rate from year 1 to year 3,f1,3 ? Question 3 Suppose the matrix of transition probabilities is given by: What is the 2-year default probability of a bond with an initial rating of B