The firm's unadjusted cost of debt financing equals the yield to maturity on new debt issues.

Name: The firm's unadjusted cost of debt financing equals the yield to maturity on new debt issues.
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Question

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The unadjusted cost of debt financing is typically equal to the yield to maturity on new debt issues because this is the rate at which the firm can borrow new funds. However, adjustments may be made to this rate based on the specific terms of the debt, such as any call provisions or credit enhancements.

The Firm's Unadjusted Cost of Debt Financing Equals the Yield