The current interest rates for 1-year T-strips and 1-year B-rated corporate strips are 3% and 6%, respectively. The rates for their 2 year strips are 6% and 10%, respectively. If the recovery rate is zero for the bank, what is the cumulative default probability on a Brated loan in two years? A. 4.43% B. 7.26% C. 4.72% D. 7.13% QUESTION 18 As a loan officer for a finance company, you are considering a loan to an A-rated company. If you use the historical record to estimate the mortality rate for A-rated loans to be 0.5% for both year 1 and year 2 and the cumulative mortality rate in year 3 is 2%, what is the mortality rate of an A-rated loan in year 3 ? A. 1.013% B. 0.875% C. 0.741% D. 1.250% The current interest rates for 1-year T-strips and 1-year B-rated corporate strips are 3% and 6%, respectively. The rates for their 2 year strips are 6% and 10%, respectively. If the recovery rate is zero for the bank, what is the cumulative default probability on a Brated loan in two years? A. 4.43% B. 7.26% C. 4.72% D. 7.13% QUESTION 18 As a loan officer for a finance company, you are considering a loan to an A-rated company. If you use the historical record to estimate the mortality rate for A-rated loans to be 0.5% for both year 1 and year 2 and the cumulative mortality rate in year 3 is 2%, what is the mortality rate of an A-rated loan in year 3 ? A. 1.013% B. 0.875% C. 0.741% D. 1.250%