You are working for a​ mid-sized company that is looking to estimate its cost of debt. The company has never had an issuance in the bond market. What would be the best proxy to estimate its cost of​ debt?   A. Cost of its bank debt   B. Cost of its equity   C. Cost of debt from companies of a similar market capitalization   D. Cost of debt in the corporate bond market

describe and compare alternative ways to estimate the probability of company defaulting on its debt obligations. Explain the difference between real-world and risk-neutral estimates

“Inside the company fixed income managers bought bonds but they did not keep them for very long at all. Instead, they were constantly buying, exchanging and selling the bonds in their portfolios” Explain why the behavior described in the above quote may happen in terms of interest-rate risk immunization and downgrade risk. Do not discuss speculation or arbitrage as causes of this behavior as these will not gain any credit in this examination.

Which of the following statements is NOT true? A. Debt contracts tend to impose more restrictions on the actions of the borrower than the lender   B. Larger corporations have easier access to the securities market   C. The financial sector is one of the least regulated industries in the US economy   D. Collateral is used to secure debt contracts

1. Why do short-term debt securities issued by private companies generally offer higher yields than treasury bills issued by central governments?

A company with a poor credit rating needs to raise funds for expansion, but the bank will not give them a loan. In addition, their common stock prices are already low, so they do not want to issue more shares of common stock. What would be the best way for this company to raise funds for the expansion? Sell secured bonds. Sell callable bonds. Sell convertible bonds. Sell unsecured bonds.

Which of the following events would make it less likely that a company would choose to call its outstanding callable bonds? O The company's financial situation improves significantly. O Ratings on the company's bonds are upgraded. O Inflation decreases significantly. Market interest rates decline sharply. O Market interest rates rise sharply.