The Pre-Tax Cost of Debt for a New Issue of Debt

question 67

Multiple Choice

The pre-tax cost of debt for a new issue of debt is determined by

• A) the investor's required rate of return on issued stock.
• B) the coupon rate of existing debt.
• C) the yield to maturity of outstanding bonds.
• D) none of the other answers are correct.

---

Definitions:

Freudian Psychoanalysis

A psychological theory and therapy method developed by Sigmund Freud that emphasizes unconscious motivations and conflicts as determinants of human behavior.

Humanistic Philosophy

A philosophical approach that emphasizes the personal worth of the individual and the centrality of human values.

Contingency Management

A form of behavior therapy in which certain behaviors are reliably followed by well-defined consequences.

Client-Centered Therapy

A form of humanistic therapy associated with Carl Rogers, in which the therapist’s genuineness, unconditional positive regard, and empathic understanding are crucial to therapeutic success.