Rollincoast Incorporated issued BBB bonds two years ago offering a yield to maturity of 11.5%. Long-term risk-free
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Rollincoast Incorporated issued BBB bonds two years ago offering a yield to maturity of 11.5%. Long-term risk-free government bonds were yielding 8.7% at the time. The current risk premium for BBB bonds against government bonds is half what it was two years ago. If risk-free long-term government bonds currently yield 7.8%, at what rate should Rollincoast expect to issue new bonds?
Related Book For
Introduction To Corporate Finance
ISBN: 9781118300763
3rd Edition
Authors: Laurence Booth, Sean Cleary
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