Question: i understand the answer is 98%, however please provide an explanation as to how this is calculated (break down the formula). A15. Assume the interest

i understand the answer is 98%, however please provide an explanation as to how this is calculated (break down the formula).

A15. Assume the interest rate in the market for one-year zero-coupon government bonds is i = 8% and the rate for one-year zero-coupon grade BBB bonds is k 10.2 %. What is the implied probability of repayment on the corporate bond (round to two decimals)? 2.00% (a) 2.04% (b) 97.96% (c) 98.00% (d) (e) 98.96%

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