Q.3052 John is the chief risk officer at a large European bank. While giving a presentation at a quarterly board meeting he got stuck in calculating the probability relevant to the ‘Ba’ rated bond surviving until the end of year 2. Using the below table what is the probability that the ‘Ba’ rated bond will survive until the end of year 2?

Average cumulative default rates (%),1970-2012, from Moody's.

Term (years):	1	2	3	4	5	7	10	15	20
Aaa	0.000	0.013	0.013	0.037	0.106	0.247	0.503	0.935	1.104
Aa	0.022	0.069	0.139	0.256	0.383	0.621	0.922	1.756	3.135
A	0.063	0.203	0.414	0.625	0.870	1.441	2.480	4.255	6.841
Baa	0.177	0.495	0.894	1.369	1.877	2.927	4.740	8.628	12.483
Ba	1.112	3.083	5.424	7.934	10.189	14.117	19.708	29.172	36.321
B	4.051	9.608	15.216	20.134	24.613	32.747	41.947	52.217	58.084
Caa – C	16.448	27.867	36.908	44.128	50.366	58.302	69.483	79.178	81.248