All of the Following Methods Can Be Used to Estimate

question 118

Multiple Choice

All of the following methods can be used to estimate the cost of debt except:

• A)If the firm targets an "A" rating (or any other bond rating), a review of the yields to maturity on A-rated bonds in the business section of the local newspaper can provide an estimate of the firm's current borrowing costs.
• B)The firm can solicit the advice of personal financial planners on the cost of issuing new debt.
• C)If the firm has debt currently trading, it can send a survey to current owners of its bonds to find out what rate the firm should offer.
• D)A firm can seek long-term debt financing from a wealthy individual; preliminary discussions with the individual will indicate a ballpark interest rate the firm can expect to pay on its borrowing.
• E)None of the above statements are correct.
• Clone of 2 prior items

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Definitions:

Duty To Serve

An obligation, often seen in utilities and public services, requiring companies to offer services to all customers within a given area, despite the possible financial loss involved.

Limited Liability Partnerships

Limited Liability Partnerships (LLPs) are partnerships in which some or all partners have limited liabilities, meaning they are not personally responsible for the partnership's debts.

Contractual Obligation

An agreement that legally binds two or more parties to specific actions or non-actions.

Commission Of A Tort

The act of committing a wrong that is recognized by law as grounds for a lawsuit, typically involving injury to individuals or entities.