12-16*.During the recession in mid-2009, homebuilder KB Home had outstanding 7-year bonds with a yield to maturity of 8.7% and a BB rating. If corresponding risk-free rates 2 were 3.5%, and the market risk premium was 5.1%, estimate the expected return of KB Home's debt using two different methods. How do your results compare? Use the recession estimates in Table 12.2 and an expected loss rate of 60% (provided by the textbook)