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Hi everyone, I have one follow up question. The question #33 is: An analyst estimates that the hazard rate for a company is 0.16 per year. The probability of survival in the first year followed by a default in the second year is closest to: a. 11.62%. b. 13.63%. c. 14.79%. d. 27.39%. The...

Hi David, Could you kindly have a look at question #8 in the 2016 FRM Part II Practice Exam and tell me whether answer c is truly correct? I think is that surplus change should be -650*40%-320*1.8%*13 because the bond value will increase as the government cut the interest rate (asset decreases...