Reduce risk in the context of effective GAP management

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1. Discuss the steps banks can take to reduce risk in the context of effective GAP management.

2. Suppose your assignment is to find how costly it is for the company to issue new bonds. Currently its long-term debt is selling for $985 per bond, with the tax rate of 35%. These semiannual bonds have 15 years to maturity and 7% coupon rate per year.

3. XYZ company pays 7% yield to maturity to its bondholders. The company is in a 40% tax bracket. Find the after-tax cost of debt.

Reference no: EM132028690

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