The pretax cost of debta is based on the current yield to, Ask an Expert

Finance

The pretax cost of debt:

a. Is based on the current yield to maturity of the firm's outstanding bonds.

b. Is equal to the coupon rate on the latest bonds issued by a firm.

c. Is equivalent to the average current yield on all of a firm's outstanding bonds.

d. Is based on the original yield to maturity on the latest bonds issued by a firm.

e. Has to be estimated as it cannot be directly observed in the market.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92404519

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