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NEW QUESTION: 1
If a borrower has a default probability of 12% over one year, what is the probability of default over a month?
A. 1.06%
B. 2.00%
C. 12.00%
D. 1.00%
Answer: A
Explanation:
Explanation
Let the probability of default over a month be p. Therefore the probability of survival at the end of 12 months would be (1 - p)