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But I could remember something like this in the question that 'there are no defaults in the first year". In that case, can we assume that there is 100% survivability in the first year? hence despite conditional probability, the result could still be 10.0%

Yes the word conditional appeared, but it was clearly stated that there are no defaults in the first year. Hence it could be assumed that there is 100% survivability in the first year. Going by this definition, 10% appears to be a probable answer.