Calculate the average hazard rate for a BB‐rated company
during the third year from the data in Table 17.1.

Transcribed Image Text:

Table 17.1 Average Cumulative Issuer-Weighted Default Rates (%), 1981-2020 Time Horizon (years) 4 5 7 10 15 0.00 0.03 0.13 0.24 0.34 0.51 0.70 0.90 0.49 0.70 0.99 0.76 1.20 1.84 0.02 0.06 0.11 0.21 0.30 0.05 0.13 0.22 0.33 0.46 0.16 0.43 0.75 1.14 0.63 1.93 3.46 4.99 1.54 2.27 3.24 4.54 6.43 8.89 11.64 14.65 3.34 7.80 11.75 14.89 17.35 20.99 24.62 28.24 CCC/C 28.30 38.33 43.42 46.36 48.58 50.75 52.76 54.76 Rating 1 2 3 AAA AA A BBB BB B