[(FVB/MVa)-(m-0.5*sigma square)]*T/ (sigma * square rout of T]

Given the distance default, the estimated risk neutral default prob is?

a)2.74%

2)12.78%

3)12.79%

4. 30.56%

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Hi David. isn't the PD formula = [ln (V/D)+(m-0.5*sigma square)*T]/signa* square rout of T

[ln(130/100)+(.25-.5*.30'2)*5]/.30*5square rout??

The question's answer is 2.74% and I get a different answer.

Will you please help me clarify what formula we need to use?

Best,

Sara