Which of the following statements best describes the relation of the real-world ( $P$ ) and risk-neutral ( $Q$ ) probabilities of default?
A) $P \leq Q$
B) $P = Q$
C) $P \geq Q$
D) Depends on the parameters of the firm for which this is being considered.

Question

Quizplus · Accepted Answer

The Answer of Which of the following statements best describes the relation of the real-world ( $P$ ) and risk-neutral ( $Q$ ) probabilities of default?
A) $P \leq Q$
B) $P = Q$
C) $P \geq Q$
D) Depends on the parameters of the firm for which this is being considered.

Which of the Following Statements Best Describes the Relation of the Real-World