Outstanding Debt of Home Depot Trades with a Yield to Maturity

question 73

Multiple Choice

Outstanding debt of Home Depot trades with a yield to maturity of 6%.The tax rate of Home Depot is 40%.What is the effective cost of debt of Home Depot?

• A)5.3%
• B)5.7%
• C)4.5%
• D)3.6%

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Definitions:

Federal Reserve

The Federal Reserve is the central banking system of the United States, responsible for setting monetary policy, regulating banks, and ensuring the stability of the financial system.

Monetary Policy

Economic policy laid down by the central bank involving management of money supply and interest rates to influence economic growth and stability.

Federal Reserve System

Central bank of the United States, whose main job is to control our rate of monetary growth.

Money Supply

The total amount of monetary assets available in an economy at any specific time.