Question: 1. Given the following table with cumulative default probabilities, calculated the probability of default during year 3, conditional on survival past year 2, for a

1. Given the following table with cumulative default probabilities, calculated the

1. Given the following table with cumulative default probabilities, calculated the probability of default during year 3, conditional on survival past year 2, for a B rated bond. Aaa A Baa Ba B Caa 1 0.000 0.008 0.020 0.170 1.125 4.660 17.723 2 0.000 0.018 0.094 0.478 3.019 10.195 27.909 3 0.000 0.042 0.218 0.883 5.298 15.566 36.116 4 0.026 0.106 0.342 1.360 7.648 20.325 42.603 5 0.100 0.178 0.467 1.835 9.805 24.692 47.836 7 0.252 0.344 0.762 2.794 13.465 32.527 54.539 10 0.525 0.521 1.308 4.353 18.426 40.922 64.928 15 1.004 1.094 2.396 7.601 27.533 50.212 70.298 20 1.204 1.884 4.082 10.510 34.852 52.375 72.783 a. 89.805% b. 5.98% C. 53.006%

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