6-10

Increase or decrease

Less or more expensive

financing. Credit ratings affect the yields on bonds. Based on the scenario described in the following table, determine whether yields will increase or decrease and whether it will be more expensive or less expensive, as compared to other players in the market, for a company to borrow money from the bond market. Cost of Borrowing Money from Scenario Impact on Yield Bond Markets ABC Real Estate is a commercial real estate firm that L primarily uses short-term financing, while its competitors primarily use long-term financing. Interest rates have recently increased dramatically. Ziffy Corp.'s credit rating was downgraded from AAA to Bellgotts Inc. has increased its market share from 15% to 37% over the last year while maintaining a profit margin greater than the industry average. Previously, Ferro Co. had only used short-term debt financing. The company now finances its current assets such as inventories and receivables with short-term debt, and it finances its fixed assets such as buildings and equipment with long-term debt. Grade Now avascript Save SContinue