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

Multiple Choice

Use the following information to answer the question(s) below.
Consider the following information regarding corporate bonds:
-Rearden Metal has a bond issue outstanding with ten years to maturity,a yield to maturity of 8.6%,and a B rating.The bondholders expected loss rate in the event of default is 50%.Assuming a normal economy the expected return on Rearden Metal's debt is closest to:

A) 0.6%
B) 1.6%
C) 4.6%
D) 6.0%