Question: Consider the following information regarding corporate bonds: RatingAAAAAABBBBBBCCC Average Default Rate0.0%0.1%0.2%0.5%2.2%5.5%12.2% Recession Default Rate0.0%1.0%3.0%3.5%8.0%16.0%48.0% Average Beta0.050.050.050.100.170.260.31 Wyatt Oil has a bond issue outstanding with seven

Consider the following information regarding corporate bonds:

RatingAAAAAABBBBBBCCC

Average Default Rate0.0%0.1%0.2%0.5%2.2%5.5%12.2%

Recession Default Rate0.0%1.0%3.0%3.5%8.0%16.0%48.0%

Average Beta0.050.050.050.100.170.260.31

Wyatt Oil has a bond issue outstanding with seven years to maturity, a yield to maturity of 7.5%, and a BBB rating. The bondholders' expected loss rate in the event of default is 70%.Assuming the economy is in recession, then the expected return on Wyatt Oil's debt is ________%

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