Use the Following Information to Answer the Question(s)below

question 18

Multiple Choice

Use the following information to answer the question(s) below.Consider the following information regarding corporate bonds:
-Wyatt Oil has a bond issue outstanding with seven years to maturity,a yield to maturity of 7.0%,and a BBB rating.The bondholders' expected loss rate in the event of default is 70%.Assuming the economy is in recession,then the expected return on Wyatt Oil's debt is closest to:

• A)3.5%.
• B)4.9%.
• C)5.5%.
• D)7.0%.