Question 10 O out of 1 points The Dunley Corp. plans to issue 5-year bonds. It believes the bonds will have a B88 rating. Suppose AAA bonds with the same maturity have a 4% yield. Also, suppose that EX the market risk premium is 5%, an expected loss rate is 50% in the event of default during average economic times. Debt beta and the probability of default are estimated according to the below information. CCC A 0.2% BB 2.2% 12.2% By Rating AAA Average Default Rate 0.0% Recession Default Rate 0.0% Average Beta 0.05 AA 0.1% 1.0% 0.05 888 0.5% 3,0% 0.10 B 5.5% 16.0% 0.26 3.0% 8.0% 48.0% 0.31 0.05 0.17 You estimate Dunley's cost of debt and the yield to maturity during average economic times, which of the following is correct? Selected Answer: Answers B. [None Giveni The cost of debt is 4.25% and the yield to maturity is 4.50% The cost of debt is 3.75% and the yield to maturity is 4.00% The cost of debt is 4.25% and the yield to maturity is 4.00% D. The cost of debt is 3.75% and the yield to maturity is 4.50% Question 10 O out of 1 points The Dunley Corp. plans to issue 5-year bonds. It believes the bonds will have a B88 rating. Suppose AAA bonds with the same maturity have a 4% yield. Also, suppose that EX the market risk premium is 5%, an expected loss rate is 50% in the event of default during average economic times. Debt beta and the probability of default are estimated according to the below information. CCC A 0.2% BB 2.2% 12.2% By Rating AAA Average Default Rate 0.0% Recession Default Rate 0.0% Average Beta 0.05 AA 0.1% 1.0% 0.05 888 0.5% 3,0% 0.10 B 5.5% 16.0% 0.26 3.0% 8.0% 48.0% 0.31 0.05 0.17 You estimate Dunley's cost of debt and the yield to maturity during average economic times, which of the following is correct? Selected Answer: Answers B. [None Giveni The cost of debt is 4.25% and the yield to maturity is 4.50% The cost of debt is 3.75% and the yield to maturity is 4.00% The cost of debt is 4.25% and the yield to maturity is 4.00% D. The cost of debt is 3.75% and the yield to maturity is 4.50%