Bond A and Bond B have the same rating and probability of default. The estimated probability that both bonds will default during the next year is 5%. If Bond A defaults next year, there is a 50% probability that Bond B will also default. What is the probability that neither Bond A nor Bond B will default over the next year?
Bond A and Bond B have the same rating and probability of default. The estimated probability that both bonds will default during the next year is 5%. If Bond A defaults next year, there is a 50% probability that Bond B will also default. What is the probability that neither Bond A nor Bond B will default over the next year? A.75%.; B.80%.; C.85%; D.95%.