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In mid-2009, Rite Aid had CCC-rated, 14-year bonds outstanding with a yield to maturity of 17.3%. At the time, similar maturity Treasures had a yield

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In mid-2009, Rite Aid had CCC-rated, 14-year bonds outstanding with a yield to maturity of 17.3%. At the time, similar maturity Treasures had a yield of 3%. Suppose the market risk premium is 6% and you believe Rite Aid's bonds have a beta of 0.38. 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-20097 b. In mid-2015, Rite Aid's bonds had a yield of 6.6%, while similar maturity Troasuries had a yield of 1.6%. What probability of default would you estimate now? a. What annual probability of default would be consistent with the yold to maturity of these bonds in mid-2009 The required return for this investment is % (Round to two decimal places)

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