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Probability that at least one of the bonds defaults

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Reference no: EM13944960

An analyst estimates that the probability of default on a seven-year AA-rated bond is 0.50, while that on a seven-year A-rated bond is 0.50. The probability that they will both default is 0.27.

Round answers to 2 decimal places.

1. What is the probability that at least one of the bonds defaults?

2. What is the probability that neither the seven-year AA-rated bond nor the seven-year A-rated bond defaults?

3. Given that the seven-year AA-rated bond defaults, what is the probability that the seven-year A-rated bond also defaults?

Reference no: EM13944960

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