Question: Question 2 Question 2 (a) Explain how you would calculate the Expected Yield of a bond in both a one- period and multiple period setting.

Question 2

Question 2 (a) Explain how you would calculate the Expected Yield of a bond in both a one- period and multiple period setting. (20 marks) (b) Outline three methods for estimating company's cost of debt (not including the Expected Yield) and explain if, and how, the risk of the debt is incorporated into the calculations. (20 marks) (0) What are potential problems or limitations of using methods. to estimate the cost of debt, that rely on bond ratings? (10 marks) (Total 50 marks)

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