Question 2: Assume the existing one-year risk-free rate is 1.5%, the market risk premium is 2%, the average loan rate is 4%, and the loss given default is 25%, what is the expected probability of repayment as determined by the market? Input your answer to 4 decimal places, enter 6.26% as .0626
Question 2: Assume the existing one-year risk-free rate is 1.5%, the market risk premium is 2%, the average loan rate is 4%, and the loss given default is 25%, what is the expected probability of repayment as determined by the market? Input your answer to 4 decimal places, enter 6.26% as .0626
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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am. 118.
Transcribed Image Text:Question 2: Assume the existing one-year risk-free rate is 1.5%, the market risk premium is 2%, the average loan
rate is 4%, and the loss given default is 25%, what is the expected probability of repayment as determined by the
market? Input your answer to 4 decimal places, enter 6.26% as .0626
0.998
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