What is the relationship between credit rating and the cost of the debt capital ?

Start networking and exchanging professional insights

Register now or log in to join your professional community.

Next Question:
Why we don't include shareholders' return formula in computing Cost of capital...
Posted by:
Muhammad Taha Zaheer Qureshi
29-June-2015

Financial Management

Question added by Deleted user
Date Posted: 2014/06/02

Upvote (1) Views (0) Followers (0) Answers (1) Report Question

Write an Answer
Register now or log in to answer.

1 Answers

by Deleted user

the lower the credit rating the higher the credit spread and as a result the higher the cost of capital.

Downvote Reply () Report

Popular Searches

Engineers Jobs Sales Executive Jobs Accountant Jobs Software Engineer Jobs Sales Manager Jobs

Write Your Answer

More Questions Like This

Shouldn't all bank debt be compulsorily rated by a credit rating agency to avoid bias?
Top Answer: I agree. Internal Rating Based approach is debatable and can have its pitfalls as its not standardized. A ... See More

Answers (1)
If all convertible bonds are converted, the company’s debt-capital ratio is closest to: A. 42.5%. B. 44.4%. C. 80.0%.
Top Answer: <p>Debt/Equity =1.25; Equity = $4,000,000</p> <p>Debt =1.25 x $4,000,000 = $5,000,000&l ... See More

Answers (7)
Which of the following is not the name of cost of capital?
Top Answer: A See More

Answers (7)
Tax-rate is relevant and important for calculation of specific cost of capital of: ?
Top Answer: <p>C. Debentures.</p> <p> </p> <p>Tax rate is relevant for Borrowed Capital ... See More

Answers (5)