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The yield on 3 - month T bill is 1 % . The yield on 3 - month commercial paper is 1 . 8 8

The yield on

3 -

month T bill is

1 % .

The yield on

3 -

month commercial paper is

1.88 % .

Assume that investors get

60 %

of the face value when commercial paper defaults. What is the probability of default of the commercial paper?

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