Financial Innovation

Table 2 Two step transition probability matrix for Service Sector

From: Portfolio optimization of credit risky bonds: a semi-Markov process approach

	AAA	AA	A	BBB	BB	B	CCC	D
AAA	0.8036	0.1488	0.0179	0.0238	0.0060	0	0	0
AA	0.0017	0.8085	0.1664	0.0159	0.0025	0.0042	0.0008	0
A	0	0.0270	0.8127	0.1343	0.0205	0.0036	0	0.0020
BBB	0.0006	0.0032	0.0531	0.8069	0.1032	0.0304	0.0020	0.0006
BB	0.0042	0.0021	0.0055	0.1115	0.6816	0.1451	0.0431	0.0068
B	0.0011	0.0007	0.0025	0.0086	0.0789	0.7229	0.1629	0.0225
CCC	0.0016	0	0.0032	0.0206	0.0032	0.1397	0.7444	0.0873
D	0	0	0	0	0	0	0	1.0000

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