Suppose a three-year corporate bond provides a coupon of 5% per year payable semiannually and has a yield of 4% (expressed with semiannual compounding). The yields for all maturities on risk-free bonds is 2% per annum (also semiannual compounding). Assume that defaults can take place every six months (immediately before a coupon payment) and that the recovery rate is 35%. Estimate the semiannual default probabilities assuming that the unconditional default probabilities are the same on each possible default date. (When answering can you explain mainly how you get the risk-free values)