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Hi David,
I'm not sure how to read the transition table in question 28.
The question states:
For a company starting with rating B in year 1, calculate the default (rating D) probability for year 2.
Starting Ending
A B C D
A 0.98 0.02 0.00 0.00
B 0.12 0.86 0.02 0.00
C 0.00 0.05 0.75 0.20
D 0.00 0.00 0.00 1.00
I've also attached a image of the table.
Can you explain how to read the table and what we are trying to find out? David, I think you may have a presented this kind problem somewhere on the site, but I can't seem to find it.
Thanks in advance.
John
I'm not sure how to read the transition table in question 28.
The question states:
For a company starting with rating B in year 1, calculate the default (rating D) probability for year 2.
Starting Ending
A B C D
A 0.98 0.02 0.00 0.00
B 0.12 0.86 0.02 0.00
C 0.00 0.05 0.75 0.20
D 0.00 0.00 0.00 1.00
I've also attached a image of the table.
Can you explain how to read the table and what we are trying to find out? David, I think you may have a presented this kind problem somewhere on the site, but I can't seem to find it.
Thanks in advance.
John