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  3. 2. consider the following one-year transition matr

2. Consider the following one-year transition matrix. Initial Rating AAA AA BBB AAA 90.81...

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2. Consider the following one-year transition matrix. Initial Rating AAA AA BBB AAA 90.81 0.70 0.09 0.02 AA 8.33 90.65 2.27 0.33 Rating at Year-End (%) BBB BB B 0.68 0.06 0.12 0 7.79 0.64 0.06 0.14 91.05 5.52 0.74 0.26 5.95 86.93 5.30 1.17 CCC Default 0 0 0.02 0 0.01 0.06 0.12 0.18 a. What is the likelihood that a bond will begin and end the year with an A rating? a b. What is the likelihood that a bond will be downgraded from AA to A? a c. What is the likelihood that a bond will be upgraded from BBB to A

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