Nielson Motors plans to issue 10-year bonds that it believes will have an BBB rating. Suppose AAA bonds with the same maturity have a 3.1% yield. Assume that the market risk premium is 4% and the expected loss rate in the event of default on the bonds is 76%. The yield that these bonds will have to pay during a recession is closest to (%) (2 decimal places):

Nielson Motors plans to issue 10-year bonds that it believes will have an BBB rating. Suppose AAA bonds with the same maturity have a 3.1% yield. Assume that the market risk premium is 4% and the expected loss rate in the event of default on the bonds is 76%. The yield that these bonds will have to pay during a recession is closest to (\%) (2 decimal places): \begin{tabular}{|r|c|c|c|c|c|c|c|} \hline Rating & AAA & AA & A & BBB & BB & B & CCC \\ \hline Average Default Rate & 0.0% & 0.1% & 0.2% & 0.5% & 2.2% & 5.5% & 12.2% \\ \hline Recession Default Rate & 0.0% & 1.0% & 3.0% & 3.0% & 8.0% & 16.0% & 48.0% \\ \hline Average Beta & 0.05 & 0.05 & 0.05 & 0.10 & 0.17 & 0.26 & 0.31 \\ \hline \end{tabular}