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What is the loan rate for the firm

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Question - Suppose two firms want to borrow money from a bank for a period of one year. Firm A has excellent credit, whereas Firm B's credit standing is such that it would pay prime + 3 percent. The current prime rate is 6.55 percent, the 30-year Treasury bond yield is 4.30 percent, the three-month Treasury bill yield is 3.47 percent, and the 10-year. Treasury note yield is 4.23 percent. Now suppose that Firm B decides to get a term loan for 10 years. What is the loan rate for the firm? How does this affect the company's borrowing cost?

Reference no: EM132968867

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