Calculate the probability that an investment-grade bond


The annual credit migration table of a group of bonds is given below:

All t\ t+ 1         Investment         Speculative          Default

Investment       0.93                       0.06                      0.01

Speculative       0.02                      0.86                      0.12

Default             0                                 0                          0

Calculate the probability that an investment-grade bond from the group will default any time within three years from now.

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Business Management: Calculate the probability that an investment-grade bond
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