If a firm's bonds are currently yielding 8% in the marketplace, why would the firm's cost of debt be lower?
A) interest rates have changed
B) additional debt can be issued more cheaply than the original debt
C) there should be no difference; cost of debt is the same as the bond's market yield
D) interest is tax-deductible
Correct Answer:
Verified
Q6: Although debt financing is usually the cheapest
Q47: The aftertax cost of preferred stock to
Q54: Each project should be judged against
A) the
Q102: The security market line shows the relationship
Q107: An upward shift in the SML indicates
Q111: The capital asset pricing model relates the
Q119: A decrease in investors' risk aversion causes
Q129: In the traditional approach to cost-of-capital analysis,firm's
Q131: The final conclusions of Modigliani and Miller
Q135: The market risk premium is equal to
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents