The TrunkLine Company debtholders are promised payments of $35 one year from today if the firm does well, but will receive only $20 if the firm does poorly. Bondholders are willing to pay $20 for the bond. The chance for the firm to do well is 50%. The expected return to the bondholders is approximately:

Select one:

a. 2.9%

b. 25.0%

c. 37.5%