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Morgan Stanley manages a well-diversified, speculative grade bond portfolio which is expected to have an annual default rate of 4.2% and loss given default of

Morgan Stanley manages a well-diversified, speculative grade bond portfolio which is expected to have an annual default rate of 4.2% and loss given default of 60%. What is the portfolios expected loss over the next 12 months? (Your answer should be a % carried to 2 places.)

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