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1) RMN Inc. has a CCC-rated bond outstanding which matures in 7 years and has a yield to maturity of 13.5%. Similar maturity US Treasury

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1) RMN Inc. has a CCC-rated bond outstanding which matures in 7 years and has a yield to maturity of 13.5%. Similar maturity US Treasury bonds have a yield of 4%. Suppose the market risk premium is 5% and you believe RMN's bonds have a beta of 0.25. The expected loss rate in the event of default is 60%. What annual default probability would be consistent with the observed yield to maturity of these bonds

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