Answer questions A and B

Score: 0 of 1 pt 5 of 7 (1 complete) HW Score: 14.29%, 1 of 7 pt P12-15 (similar to) Question Help In mid-2009, Rite Aid had CCC-rated, 7-year bonds outstanding with a yield to maturity of 17.3%. At the time, similar maturity Treasuries had a yield of 5%. Suppose the market risk premium is 4% and you believe Rite Aid's bonds have a beta of 0.33. The expected loss rate of these bonds in the event of default is 50%. a. What annual probability of default would be consistent with the yield to maturity of these bonds in mid-2009? b. In mid-2015, Rite-Aid's bonds had a yield of 6.7%, while similar maturity Treasuries had a yield of 1.2%. What probability of default would you estimate now? a. What annual probability of default would be consistent with the yield to maturity of these bonds in mid-2009? The required return for this investment is |%. (Round to two decimal places.)