An analyst estimates that the probability of default on a seven-year
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?