Question

The cost of debt capital for a firm . a. is equal to the current yield (not YTM) on the firm’s outstanding bonds b. can be calculated by estimating the beta of the firm’s equity and then using the SML c. can be calculated by looking at the coupon rates on existing bonds of similar risk d. can be estimated even if the firm’s bonds are not publicly traded, by looking at the yield to maturity on bonds outstanding from peer group firms with similar ratings and maturity.

Answer 1

Answer:

d. can be estimated even if the firm’s bonds are not publicly traded, by looking at the yield to maturity on bonds outstanding from peer group firms with similar ratings and maturity

Explanation:

The cost of Debt for a firm is estimated even if the firm's bonds are not publicly traded, by looking at the yield on bonds outstanding from peer group firms with similar ratings and maturity.