Consider the following information regarding corporate bonds: Rating AAA AA A BBB BB B CCC Average Default Rate 0.0% Recession Default Rate 0.0% 0.1% 0.2% 0.5% 2.2% 5.5% 12.2% 1.0% 3.0% 3.0% 8.0% 16.0% 48.0% Average Beta 0.05 0.05 0.05 0.10 0.17 0.26 0.31 A firm issues a debt with seven years to maturity, a yield to maturity of 7.8%, and a BBB rating. The bondholders' expected loss rate in the event of default is 75%. Assuming a normal economy the expected return on this debt is closest to: 1つ選択してください: A. 7.3%. B. 7.5%. C. 7.8%. D. 8.0%.
Consider the following information regarding corporate bonds: Rating AAA AA A BBB BB B CCC Average Default Rate 0.0% Recession Default Rate 0.0% 0.1% 0.2% 0.5% 2.2% 5.5% 12.2% 1.0% 3.0% 3.0% 8.0% 16.0% 48.0% Average Beta 0.05 0.05 0.05 0.10 0.17 0.26 0.31 A firm issues a debt with seven years to maturity, a yield to maturity of 7.8%, and a BBB rating. The bondholders' expected loss rate in the event of default is 75%. Assuming a normal economy the expected return on this debt is closest to: 1つ選択してください: A. 7.3%. B. 7.5%. C. 7.8%. D. 8.0%.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Consider the following information regarding corporate bonds:
Rating
AAA
AA
A
BBB
BB
B
CCC
Average Default Rate 0.0%
Recession Default Rate 0.0%
0.1%
0.2%
0.5%
2.2%
5.5% 12.2%
1.0%
3.0%
3.0%
8.0% 16.0% 48.0%
Average Beta 0.05
0.05
0.05
0.10
0.17
0.26 0.31
A firm issues a debt with seven years to maturity, a yield to maturity of 7.8%, and a BBB rating. The
bondholders' expected loss rate in the event of default is 75%. Assuming a normal economy the expected
return on this debt is closest to:
1つ選択してください:
A. 7.3%.
B. 7.5%.
C. 7.8%.
D. 8.0%.
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