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QUESTION 4: The RiskMetrics groups have developed a new Z metrics model for credit ratings of corporate and sovereign obligors. Explain the model for calculating

QUESTION 4:

The RiskMetrics groups have developed a new Z metrics model for credit ratings of corporate and sovereign obligors.

Explain the model for calculating the probability of default.

Compare the performance of the model with that of other rating providers.

Explain whether the model provides accurate and stable ratings during normal and stressed periods.

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