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Financial Risk Manager Part 1

Financial Risk Manager Part 1

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A junior fixed-income analyst at an investment management firm is evaluating the credit quality of a diversified bond portfolio consisting of bonds classified as investment grade, high-yield, or unrated. Upon observing that the expected return profile of a bond appears to be related to its classification, the analyst constructs a probability matrix to assign probabilities to different combinations of a bond's return profile and its classification. Which of the following correctly describes this probability matrix?

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