Re: Cost of equity
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What is your evidence of the market value of the bonds not changing?
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Quotes from Bloomberg at the time. I don't remember the exact numbers, they did change slightly, but not nearly as much as they "should" have. This company had negative earnings almost 1.5x their market cap! Let's say your numbers were the market prices, that's a change of 22% or about equivalent to a downgrade from BBB to BBB-. Do you really think that's all the true cost of debt changed?
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