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 0.2 60.31

Rearden Metal has a bond issue outstanding with ten years to maturity, a yield to maturity of 8.6%, and a B rating.The corresponding risk-free rate is 3% and the market risk premium is 6%.Assuming a normal economy, the expected return on Rearden Metal's debt is closest to:

a 4.6%

b 1.6%

c 6.0%

d 0.6%