Vasicek's model question:

Vasicek company, a "Ba" rated company, has a market credit spread of 200 basis points on a 10-year bond. The recovery rate is 40%. Calculate:

1. The average hazard rate per year over 10 years using credit spreads. What is the expected risk premium earned by bond traders?

2. What factors can help to explain the magnitude of the expected risk premium calculated in part 1 b)?