Company is deemed more risky by investors in bond markets

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Company C presently has access to floating interest rate funds at a margin of 1.0% over LIBOR. Its direct borrowing cost is 11% in the fixed-rate bond market. In contrast, company D has access to fixed-rate funds at 12.2% and floating-rate funds at LIBOR+1.7%. Which company is deemed more risky by the investors in the bond markets?

a. Company C

b. Company D

c. Can't tell from the information given.

Reference no: EM131622036

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