Consider the following information regarding corporate bonds:

Rating	AAA	AA	A	BBB	BB	B	CCC
Average Default Rate	0.0%	0.0%	0.2%	0.4%	2.1%	5.2%	9.9%
Recession Default Rate	0.0%	1.0%	3.0%	3.0%	8.0%	16.0%	43.0%
Average Beta	0.05	0.05	0.05	1.0	0.17	0.26	0.31

Rearden Metal has a bond issue outstanding with ten years to maturity, a yield to maturity of 8.6%, and a B rating. The bondholders expected loss rate in the event of default is 50%. Assuming a normal economy the expected return on Rearden Metal's debt is closest to:

1.6%

0.6%

6.0%

4.6%