Suppose that in 24.1 the spread between the yield on a 5-year bond issued by the same
Chapter 24, Problem 24.2(choose chapter or problem)
Suppose that in 24.1 the spread between the yield on a 5-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 5-year period. What do your results indicate about the average hazard rate in years 4 and 5?
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