问题如下:
When market interest rate is 7%, a company issues a $1 million bond with maturity of 3-year, a 5% coupon rate, and annual interest payments. After the bond is issued, the maket interest rate increases.
For analytical purposes, which of the following statements is the most correct?
选项:
A. The debt-to-equity ratio will increase.
B. The debt-to-equity ratio will decrease.
C. The debt-to-equity ratio will stay the same.
解释:
B is correct.
When the market rate increases, the bond price will decrease. For analytical purposes, in debt-to-equity ratio, lower debt and higher equity will decrease its value.
还是不能理解,interest rate上升导致debt的增加,D/E应该增加