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I purchased 5 bonds each worth $100 at 10% interest rate and financed them with my own cash, $100 and bank debt, $400 at 5%
I purchased 5 bonds each worth $100 at 10% interest rate and financed them with my own cash, $100 and bank debt, $400 at 5% interest rate. What are my nominal return, ROA, and ROE?
1) if there is no change in interest and market valuation on bonds?
2) if the interest rate on bank debt goes up to 15%?
3) if the interest rate on bank debt goes down to 1%?
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