Question: 3. 3. . The following represents two yield curves. Maturity Treasury Yields B-rated Corporate Bond Yields 3 percent 6 percent 6 percent 10 percent 12

3. . The following represents two yield curves. Maturity Treasury Yields B-rated Corporate Bond Yields 3 percent 6 percent 6 percent 10 percent 12 percent 17 percent 1 year 2 year 20 year d) What is the expected probability of default in year 2 of two-year maturity B-rated debt? (3 points) e) What is the probability that two-year B-rated corporate debt will be fully repaid? (3 points)

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