Question: During the recession in mid 2009 homebuilder KB Home had outstanding

During the recession in mid-2009, homebuilder KB Home had outstanding 6-year bonds with a yield to maturity of 8.5% and a BB rating. If corresponding risk-free rates were 3%, and the market risk premium was 5%, estimate the expected return of KB Home’s debt using two different methods. How do your results compare?

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  • CreatedAugust 06, 2014
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