Increase/Decrease

Less/More Expensive

Credit ratings affect the yields on bonds. Based on the scenario described in the following table, determine whether yields will increase or decrease and whether it will be more expensive or less expensive, as compared to other players in the market, for a company to borrow money from the bond market. Impact on Yield Cost of Borrowing Money from Bond Markets Scenario A car manufacturing company loses 40% of its market share and has a declining investment in new product development. A start-up company is struggling with finances for its projects. Less expensive More expensive A company's interest coverage ratio improves. A company's credit rating was upgraded from AA to AAA. Decrease