Question $10$

Use the following information to answer the question$($s$)$ below.

Consider the following information regarding corporate bonds:

Nielson Motors plans to issue $10-$year bonds that it believes will have an BBB rating. Suppose AAA bonds

with the same maturity have a $4\mathrm{.}1\%$ yield. Assume that the market risk premium is $4\%$ and the expected loss

rate in the event of default on the bonds is $73\%.$ The yield that these bonds will have to pay during a

recession is closest to $(\%)(2$ decimal places$)$: