Contrary to popular belief, a leveraged firm's new bond yield will not, under all other circumstances, be lower than an unleveraged firm's new bond yield. This article discusses interest rates.
An interest rate is the amount of interest that is payable each period expressed as a proportion of the amount lent, deposited, or borrowed. The total amount of interest charged on a sum lent or borrowed depends on the principal amount, interest rate, frequency of compounding, and length of the loan, deposit, or borrowing.
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