In mid-2009, Rite Aid had CCC-rated, 66-year bonds outstanding with a yield to maturity of 17.3...

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In mid-2009, Rite Aid had CCC-rated, 66-year bonds outstandingwith a yield to maturity of 17.3 % At the time, similar maturityTreasuries had a yield of 3 % Suppose the market risk premium is 5% and you believe Rite Aid's bonds have a beta of 0.31 The expectedloss rate of these bonds in the event of default is 60 % a. Whatannual probability of default would be consistent with the yield tomaturity of these bonds in mid-2009? b. In mid-2015, Rite-Aid'sbonds had a yield of 7.1 % while similar maturity Treasuries had ayield of 1.5 % What probability of default would you estimate now?a. What annual probability of default would be consistent with theyield to maturity of these bonds in mid-2009? The required returnfor this investment is nothingm%. (Round to two decimal places.)The annual probability of default is nothingm%. (Round to twodecimal places.) b. In mid-2015, Rite-Aid's bonds had a yield of7.1 % while similar maturity Treasuries had a yield of 1.5 % Whatprobability of default would you estimate now? The probability ofdefault will be nothingm%. (Round to two decimal places.)

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In mid-2009, Rite Aid had CCC-rated, 66-year bonds outstandingwith a yield to maturity of 17.3 % At the time, similar maturityTreasuries had a yield of 3 % Suppose the market risk premium is 5% and you believe Rite Aid's bonds have a beta of 0.31 The expectedloss rate of these bonds in the event of default is 60 % a. Whatannual probability of default would be consistent with the yield tomaturity of these bonds in mid-2009? b. In mid-2015, Rite-Aid'sbonds had a yield of 7.1 % while similar maturity Treasuries had ayield of 1.5 % What probability of default would you estimate now?a. What annual probability of default would be consistent with theyield to maturity of these bonds in mid-2009? The required returnfor this investment is nothingm%. (Round to two decimal places.)The annual probability of default is nothingm%. (Round to twodecimal places.) b. In mid-2015, Rite-Aid's bonds had a yield of7.1 % while similar maturity Treasuries had a yield of 1.5 % Whatprobability of default would you estimate now? The probability ofdefault will be nothingm%. (Round to two decimal places.)