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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%
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):
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