Current macroeconomic environment is associated with rising monetary policy interest rates, as set by the Central Banks,
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Question:
It is identified that the following key frameworks for Benchmark Pricing of Basic Debt:1. Cost of Debt and YTM 2. Cost of Debt using Debt Rating Approach3. Cost of Debt with Risk Premium
Required:
(a) How do rising policy interest rates influence cost of debt faced by companies through YTM, Debt Rating and Risk Premium approaches? Explain?
(b) Do hikes by the US Fed influence companies' Degree of Total Leverage? And if so, how? If not, why not? Explain?
Related Book For
International Economics Theory and Policy
ISBN: 978-0273754206
9th Edition
Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz
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