Question: Suppose that in Problem 24.1 the spread between the yield on a five-year bond issued by the same company and the yield on a similar

Suppose that in Problem 24.1 the spread between the yield on a five-year bond issued by the same company and the yield on a similar risk-free bond is 60 basis points. Assume the same recovery rate of 30%. Estimate the average hazard rate per year over the five-year period. What do your results indicate about the average hazard rate in years 4 and 5?

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