We can estimate a firm's cost of debt by _____________________.
A) Observing the yield to maturity on the firm's outstanding bonds.
B) Observing the coupon rate on the firm's outstanding bonds.
C) Observing the yield to maturity on newly-issued debt of other firms without regard to risk.
D) Observing the risk-free rate and adding a risk premium to the coupon rate of existing debt.
E) Observing the firm's bank borrowing rate on short-term loans.
Correct Answer:
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