Question
The following table shows the probability of default (%) for companies starting with a particular credit rating. Which of the statements is correct? Choose all
The following table shows the probability of default (%) for companies starting with a particular credit rating.
Which of the statements is correct? Choose all that apply.
a. The probability that a bond initially rated Aa will default during the first year is 0.022%. | ||
b. The probability that a bond initially rated B will default during the third year is 14.723%. | ||
c. The probability that a bond initially rated Baa will default by the end of the seventh year is 2.872%. | ||
d. If a companys initial credit rating is low, default probabilities tend to increase with time. |
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