Use the following information to answer the question(s) below. Consider the following information regarding corporate bonds:

Rating	AAA	AA	A	BBB	BB	B	CCC
Average Default Rate	0.0%	0.1%	0.2%	0.5%	2.2%	5.5%	12.2%
Recession Default Rate	0.0%	1.0%	3.0%	3.0%	8.0%	16.0%	48.0%
Average Beta	0.05	0.05	0.05	0.10	0.17	0.26	0.31

Nielson Motors plans to issue 10-year bonds that it believes will have a BBB rating. Suppose AAA bonds with the same maturity have a 3.5% yield. Assume that the market risk premium is 5% and the expected loss rate in the event of default on the bonds is 60%. The yield that these bonds will have to pay during average economic times is closest to:

		3.75%.
		3.50%.
		4.00%.
		5.50%.