- CFA Exams
- CFA Level I Exam
- Study Session 10. Corporate Finance (1)
- Reading 33. Cost of Capital
- Subject 2. Cost of Debt and Preferred Stock
CFA Practice Question
True or False? The before-tax cost of debt capital for a firm can be observed directly even if the firm's bonds are not publicly traded.
Correct Answer: False
User Contributed Comments 2
User | Comment |
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JepTang | To evaluate the firm's average cost of debt is already difficult because it would be almost impossible to be granted access to such an information. Therefore, a firm's cost of debt for a particular project can be observed if the bond is traded in an organized exchange. However, approximating/computing the company's average cost of debt would still be difficult. |
jpducros | cost of debt capital = cost of debt, not cost of capital. |