1)An analyst estimates that the probability of default on a seven-year AA-rated bond is 0.06, while that on a seven-year A-rated bond is 0.13. The probability that they will both default is 0.04.
a. What is the probability that at least one of the bonds defaults?
b. What is the probability that neither the seven-year AA-rated bond nor the seven-year A-rated bond defaults?
2)The probabilities that stock A will rise in price is 0.40 and that stock B will rise in price is 0.60. Further, if stock B rises in price, the probability that stock A will also rise in price is 0.80.
a.What is the probability that at least one of the stocks will rise in price?