The pre-tax cost of debt:
a. is based on the original yield to maturity on the latest bonds issued by a firm.
b. has to be estimated as it cannot be directly observed in the market.
c. is equivalent to the average current yield on all of a firm's outstanding bonds.
d. is equal to the coupon rate on the latest bonds issued by a firm.
e. is based on the current yield to maturity of the firm's outstanding bonds.
References
a. is based on the original yield to maturity on the latest bonds issued by a firm.
b. has to be estimated as it cannot be directly observed in the market.
c. is equivalent to the average current yield on all of a firm's outstanding bonds.
d. is equal to the coupon rate on the latest bonds issued by a firm.
e. is based on the current yield to maturity of the firm's outstanding bonds.
References