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Which of the following statements regarding a firm s pre - tax cost of debt is accurate? It could be based on the stock required
Which of the following statements regarding a firms pretax cost of debt is accurate?
It could be based on the stock required return under teh constant growth model andor on the expected return on the stock according to CAPM
It is equal to the coupon rate on the latest bonds issues by the company.
It is based on the yield to maturity of he companys outstanding bonds
It must be estimated using the return on similar preferred stock observed in the market
It is equivalent to the average real rate of return on all of a companys outstanding bons after discounting the effects of inflation.
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