In May 2015, the credit rating agencies downgraded the debt of General Motors Corporation to junk status.Discuss the effect of this drop in credit status on the company's WACC.

In May 2015, the credit rating agencies downgraded the debt of General Motors Corporation to junk status.If you have been suing the YTM for the firm's bonds as your estimate of the cost of debt capital and you use the same estimation procedure following the downgrade, has your estimate become more or less reliable? Explain.