Relationship Between Interest Rate and Corporate Bond Yield
AbstractThe author created a model that describes the relationship between the current bank interest rate (rate on loans extended to business entities) and future corporate bond yield (in the text this is formula # 17): Cbank = (k+Cbond)/(1-r). Where: CBank is interest rate on bank loans; CBond is bond yield; r is yield anticipated by shareholders; k is special ratio calculated from the formula # 22 which depends on authorized capital, EBIT, depreciation and income tax rate. Use of the model applied to Russia (calculations of early 2010) has shown that to the beginning of 2011, the financial situation in raw material industries will improve, while in other industries it will aggravate.
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Bibliographic InfoPaper provided by Moscow State University, Faculty of Economics in its series Working Papers with number 0006.
Length: 32 pages
Date of creation: Jan 2014
Date of revision:
Bank interest rate; bond yield; yield anticipated by shareholders;
Find related papers by JEL classification:
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-ACC-2014-04-18 (Accounting & Auditing)
- NEP-ALL-2014-04-18 (All new papers)
- NEP-CIS-2014-04-18 (Confederation of Independent States)
- NEP-MAC-2014-04-18 (Macroeconomics)
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