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(Rate with LGD, risk-averse lender) Assume a bank can invest in a government bonds at a risk-free rate of 5.5%. Alternatively, it can invest in

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(Rate with LGD, risk-averse lender) Assume a bank can invest in a government bonds at a risk-free rate of 5.5%. Alternatively, it can invest in a corporate bond with a default probability of 3.3%. If the issuer defaults, the bank expects to lose 76.2% of the investment. A risk-averse bank that requires an additional premium of 2.9% as a result of risk aversion would be indifferent between investing in the government bond and the corporate bond if the corporate bond offers a rate or %. Round to the nearest 0.01%, drop the \% symbol. E.g., if your answer is 0.10245 or 10.245%, record it as 10.25

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