Calculate the probability of default of the corporate bond

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Reference no: EM131901724

Let us assume that the one year risk-free interest rate is 2.8%. Now imagine that the yield of corporate bond maturing one year from today is 6.0%. The current market price of corporate bond is 157.81 EUR.

Please calculate the probability of default of the corporate bond i.e. the likelyhood that the corporation will default in one year.

Present your answer in percent without inserting percentage sign (%).

Reference no: EM131901724

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