高级公司金融Long-Term Debt.pptVIP

Discount rate for the bond consists of risk free rate and default risk premium. Management may know more about the The return of debt instruments consist of two components, risk free rate and risk premium The risk of debt depends on whether the debt holders can get the promised interest and the principal. Whether a firm will default? If it default how much debt holder will recover? Bond rating reflects a firm’s ability to repay debt not it’s operating performance. It determines the cost of debt if a firm issues bond in the market. Risk free rate is not purely risk free. It is just default ris