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Corporate Finance · Quiz 1 · 15 Mar 2026 · January 2026 term

Question 19: Your portfolio consists of two "Red" bonds, each with a …

Question 19

+4 marksOne correct option

Your portfolio consists of two "Red" bonds, each with a face value of 100 and a probability of default p =10%. The bonds are perfectly correlated. Through securitization, you create a Senior Bond (paid first) and a Junior Bond (paid last). What is the probability that the Junior Bond defaults?

  1. A

    1%

  2. B

    10%

  3. C

    15%

  4. D

    20%

Show answer

Correct answer

  • B

    10%

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Question 19 of 25 in the IIT Madras BS Corporate Finance (Corporate Finance) Quiz 1 paper sat on 15 Mar 2026, in the January 2026 term (Corporate Finance 15 Mar 26). It carries 4 marks.

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