Which of the following is not a component in determining the cost of debt?

Question

Quizplus · Accepted Answer

There is no such thing as an "interest rate premium." The other choices are all components in determining the cost of debt. The inflation premium accounts for the expectation of inflation over the loan term, the default risk premium accounts for the risk that the borrower will not be able to repay the loan, the liquidity premium accounts for the difficulty in selling the debt on the secondary market, and the maturity risk premium accounts for the risk associated with the length of the loan term.

Which of the Following Is Not a Component in Determining