medium · FRM Part 1 Quantitative Analysis
A 2-year bond has a 2% probability of default in year 1. If it survives year 1, the conditional probability of default in year 2 is 3%.
What is the cumulative probability of default by the end of year 2?
- 4.94%
- 6.00%
- 5.00%
- 4.00%
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