Several years ago, AMGN issued new bonds at face value with a yield-

to-maturity of 7%. Now, with 4 years left until the maturity of the bonds,

the company has run into some hard times and the rating on their bonds

has had a negative impact on their bond prices. The yield-to-maturity is

now at 11%. What has happened to the price of the bond? If investors believe

that the company will make good on their coupon payments but MIGHT go

bankrupt and into default before the full value on their principal is returned, they

now think that, at the most, they might get back only 80% of the face value at

maturity. Knowing all this, if they were to buy this bond TODAY, what yield-to-

maturity would they expect to receive?