Inmid-2009, Rite Aid hadCCC-rated, 7

7-year bonds outstanding with a yield to maturity of 17.3 %

17.3%. At thetime, similar maturity Treasuries had a yield of 5 %

5%. Suppose the market risk premium is 5 %

5% and you believe RiteAid's bonds have a beta of 0.35

0.35. The expected loss rate of these bonds in the event of default is 52 %

52%. What annual probability of default would be consistent with the yield to maturity of these bonds inmid-2009?

What annual probability of default would be consistent with the yield to maturity of these bonds inmid-2009?

The required return for this investment is

nothing

%.