Bluerock manages a well-diversified speculative grade bond portfolio which is expected to have an annual default rate of 5.3% and loss given default of 60%.

a. What is the portfolios expected loss over the next 12 months? (Your answer should be a % carried to 2 places.)

b. If the speculative portfolio has a weighted average contractual coupon rate of 8.1%/year, what is its expected annual yield? (Your answer should be a % carried to 2 places.)