{1, ..., 8}, where s = 4, e.g., represents a BBB rating. ) What is the probability that a bond over two years moves from an AAA rating to Default,with the above transition matrix? b) What is the long-term (stationary) distribution, p of ratings for a corporate bond withthe above transition matrix (assuming that it has a very long maturity sate)?
Fig: 1
Fig: 2
Fig: 3