Using this table transition matrix to solve it.
a. Computer Corporation has been assigned a B rating. What is its probability to default by the end of the year?
b. Iphone Ltd has been assigned a CCC rating. What is its probability of improving
its rating to B by year-end?
c. Pencil Corp. has been assigned an AA rating. What is its probability to maintain the rating by year-end?

 

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From/To AAA AA A B CCC/C AAA 87.09 0.48 0.02 0.00 0.01 0.00 0.00 AA 9.05 87.32 1.56 0.08 0.02 0.02 0.00 A 0.53 7.72 88.73 3.19 0.10 0.06 0.09 0.05 0.46 4.97 86.72 4.52 0.15 0.16 0.11 0.05 0.25 3.48 78.12 4.54 0.49 0.03 0.06 0.11 0.42 6.66 74.73 13.42 CCC/C 0.05 0.02 0.01 0.09 0.53 4.81 43.91 D 0.00 0.02 0.05 0.15 0.60 3.18 26.55 NR 3.10 3.88 4.29 5.86 9.43 12.51 15.39 From/To AAA AA A B CCC/C AAA 87.09 0.48 0.02 0.00 0.01 0.00 0.00 AA 9.05 87.32 1.56 0.08 0.02 0.02 0.00 A 0.53 7.72 88.73 3.19 0.10 0.06 0.09 0.05 0.46 4.97 86.72 4.52 0.15 0.16 0.11 0.05 0.25 3.48 78.12 4.54 0.49 0.03 0.06 0.11 0.42 6.66 74.73 13.42 CCC/C 0.05 0.02 0.01 0.09 0.53 4.81 43.91 D 0.00 0.02 0.05 0.15 0.60 3.18 26.55 NR 3.10 3.88 4.29 5.86 9.43 12.51 15.39