Alpha Geek

(8)

$10/per page/Negotiable

About Alpha Geek

Levels Tought:
University

Expertise:
Accounting,Algebra See all
Accounting,Algebra,Architecture and Design,Art & Design,Biology,Business & Finance,Calculus,Chemistry,Communications,Computer Science,Environmental science,Essay writing,Programming,Social Science,Statistics Hide all
Teaching Since: Apr 2017
Last Sign in: 347 Weeks Ago, 1 Day Ago
Questions Answered: 9562
Tutorials Posted: 9559

Education

  • bachelor in business administration
    Polytechnic State University Sanluis
    Jan-2006 - Nov-2010

  • CPA
    Polytechnic State University
    Jan-2012 - Nov-2016

Experience

  • Professor
    Harvard Square Academy (HS2)
    Mar-2012 - Present

Category > Business & Finance Posted 30 May 2017 My Price 3.00

Wyatt Oil has a bond issue outstanding with seven years to maturity

Consider the following information regarding corporate bonds:

Rating

AAA

AA

A

BBB

BB

B

CCC

Average Default Rate

0.0%

0.0%

0.2%

0.4%

2.1%

5.2%

9.9%

Recession Default Rate

0.0%

1.0%

3.0%

3.0%

8.0%

16.0%

43.0%

Average Beta

0.05

0.05

0.05

1.0

0.17

0.26

0.31

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.) 5.5%

b.) 7.0%

c.) 4.9%

d.) 3.5%

Answers

Alpha Geek
(8)
Status NEW Posted 30 May 2017 08:05 AM My Price 3.00

-----------

Attachments

file 1496131883-Answer.docx preview (120 words )
C-----------ons-----------ide-----------r t-----------he -----------fol-----------low-----------ing----------- in-----------for-----------mat-----------ion----------- re-----------gar-----------din-----------g c-----------orp-----------ora-----------te -----------bon-----------ds:----------- R-----------ati-----------ng -----------AAA----------- AA----------- A -----------BBB----------- BB----------- B -----------CCC----------- A-----------ver-----------age----------- De-----------fau-----------lt -----------Rat-----------e 0-----------.0%----------- 0.-----------0% -----------0.2-----------% 0-----------.4%----------- 2.-----------1% -----------5.2-----------% 9-----------.9%----------- R-----------ece-----------ssi-----------on -----------Def-----------aul-----------t R-----------ate----------- 0.-----------0% -----------1.0-----------% 3-----------.0%----------- 3.-----------0% -----------8.0-----------% 1-----------6.0-----------% 4-----------3.0-----------% -----------Ave-----------rag-----------e B-----------eta----------- 0.-----------05 -----------0.0-----------5 0-----------.05----------- 1.-----------0 0-----------.17----------- 0.-----------26 -----------0.3-----------1 -----------Wya-----------tt -----------Oil----------- ha-----------s a----------- bo-----------nd -----------iss-----------ue -----------out-----------sta-----------ndi-----------ng -----------wit-----------h s-----------eve-----------n y-----------ear-----------s t-----------o m-----------atu-----------rit-----------y, -----------a y-----------iel-----------d t-----------o m-----------atu-----------rit-----------y o-----------f 7-----------.0%-----------, a-----------nd -----------a B-----------BB -----------rat-----------ing-----------. T-----------he -----------bon-----------dho-----------lde-----------rs -----------exp-----------ect-----------ed -----------los-----------s r-----------ate----------- in----------- th-----------e e-----------ven-----------t o-----------f d-----------efa-----------ult-----------
Not Rated(0)