Question: Problem 5 (14 points) The 1., 2., and 3-year CDS spreads are 110, 130, and 145 basis points, respectively. The risk-free rate is 3% for

Problem 5 (14 points) The 1., 2., and 3-year CDS spreads are 110, 130, and 145 basis points, respectively. The risk-free rate is 3% for all maturities, the recovery rate is 30%, and payments are quarterly. Calculate the hazard rate each year. What is the probability of default in year 1, year 2, and year 3

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