Assume Risk-Neutrality and That the Appropriate Interest Rate Is 8

Assume risk-neutrality and that the appropriate interest rate is 8%. You believe your probability of
Defaulting on a loan and repaying nothing is only 5%, but your bank believes it is 20%. What
Rate will the bank quote you on a loan, and what does this make the expected borrowing rate
From your perspective?

A) bank rate = 28%; your expected borrowing rate = 35%
B) bank rate = 33.2%; your expected borrowing rate = 35%
C) bank rate =35%; your expected borrowing rate = 8%
D) bank rate = 35%; your expected borrowing rate =33.2%