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The spread between the yield on a five-year bond issued by a company and the yield on a similar risk-free bond is 100 basis points.
The spread between the yield on a five-year bond issued by a company and the yield on a similar risk-free bond is 100 basis points. The spread is 50 basis points for a three-year bond. Assuming a recovery rate of 30%, what is the average hazard rate in years 4 to 5?
a.
None of the other answers provided above is correct
b.
3.00%
c.
1.42%
d.
0.71%
e.
2.50%
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