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QUESTION
Suppose that the cumulative default probability for a company for years one, two, three and four are 3%, 6.5%, 10%, and 14. (Study Table 23.2 on page...
Suppose that the cumulative default probability for a company for years one, two, three and four are 3%, 6.5%, 10%, and 14.5%. (Study Table 23.2 on page 507.))(i)What is the unconditional default probability for year four?(ii)What is the default probability for year four conditional on no default in earlier years ?
