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Which of the following would you use as a proxy for the ABC Companys cost of debt? Choose one answer. (1) Federal funds discount rate

Which of the following would you use as a proxy for the ABC Companys cost of debt?

Choose one answer.

(1) Federal funds discount rate

(2) Coupon rate on debt previously issued by the ABC Company

(3) Yield to maturity on debt previously issued by the ABC Company

(4) Coupon rate on a bond issued today by another company that is very similar in capital structure and risk profile to the ABC Company and that were sold at face value

a. 1 and 2

b. 2 and 3

c. 3 and 4

d. 2 and 4

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