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Consider the following case:

Country P uses the currency Euro and gives p percent interest on a one year bond issued in Euro.

Country Q uses the currency TL and gives q percent interest on a one year bond issued in Euro.

Question:

How can we determine the probability of default of the country Q with respect to P ?

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  • $\begingroup$ Cross-posted. $\endgroup$ – Bob Jansen Jun 8 '18 at 10:41
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    $\begingroup$ @BobJansen You have given the link of this question. Plus, I asked the question first in here, and second in Quantitative Finance SE, and stated there that I have cross posted, see quant.stackexchange.com/questions/40230/… $\endgroup$ – onurcanbkts Jun 8 '18 at 12:19
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    $\begingroup$ I can't edit any more. The goal of pointing out that something is cross-posted is that users on both sites can check whether the question already has an answer on the other site. NB: Cross-posted is discouraged in general, also when disclosed. $\endgroup$ – Bob Jansen Jun 8 '18 at 13:54

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