(redirected from Cost of debt)
Also found in: Dictionary, Thesaurus, Medical, Legal, Financial, Acronyms.
Related to Cost of debt: Cost of equity


obligation in services, money, or goods owed by one party, the debtor, to another, the creditor. When contested, debts are collected by a civil suit upon which the judge renders a judgment, and an execution is levied on the debtor's property. In ancient nations debt was associated with slavery because the insolvent debtor and his household were in many cases turned over to the creditor to perform compulsory services. In early Rome the insolvent was given into custody of the creditor for 60 days prior to his sale as a slave, subject to such treatment as pleased the creditor. That arrangement was mitigated in 494 B.C. by the first of the uprisings of the Roman people; turbulence in Rome afterward was to a large extent occasioned by the desire to restrain creditors. In Greece the reforms of SolonSolon
, c.639–c.559 B.C., Athenian statesman, lawgiver, and reformer. He was also a poet, and some of his patriotic verse in the Ionic dialect is extant. At some time (perhaps c.600 B.C.) he led the Athenians in the recapture of Salamis from the Megarians.
..... Click the link for more information.
 had a similar origin. In ancient Israel, every 50th year—the year of jubilee—Jewish debtors were freed and their obligations were canceled. Sumerian and Babylonian kings also periodically proclaimed jubilee periods when debts over seven years old were forgiven. Imprisonment for debt, which once crowded prisons, was ended in theory in England and the United States by laws enacted in the 19th cent. The laws of bankruptcybankruptcy,
in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most instances, to
..... Click the link for more information.
 are designed to apply the resources of debtors to their debts and thereafter to remove such legal obligations.


See D. Graeber, Debt: The First 5,000 Years (2011).

References in periodicals archive ?
1- 1 there is a negative and significant relation between the rate of financial expenses coverage with the cost of debt of companies.
According to the company, with this financing exercise, it achieves several interim targets included in its financial strategy which are extension of the average duration of its borrowings, achievement of a more balanced maturity profile and reduction of the cost of debt significantly six months ahead of time.
In other words, family owned firms want to get lower cost of debt financing.
In Section One, we present the single period binomial model, in which we can solve for the cost of debt as a function of the amount of debt and obtain simple interesting relationships between the cost of debt, the return to levered equity and the amount of debt.
Klock, Mansi, and Maxwell (2005) find that anti-takeover provisions reduce the cost of debt financing.
In this paper, I examine whether the event of increased regulatory monitoring produced less reliance on debt covenants, the cost of debt or both.
The problem of these approaches is that they might not reflect the correct cost of debt and conceal the actual tax savings earned when valuing a cash flow with a discount rate that takes into account the tax shields (Tham & Velez-Pareja, 2004; Velez-Pareja & Benavides, 2006; Velez-Pareja, Ibragimov y Tham, 2008).
For example, if the cost of debt is 6 percent and it comprises 30 percent of the capital structure, while the cost of equity is 15 percent and it comprises 70 percent of the capital structure, then the WACC = (6% x 30%) + (15% x 70%) = 12.
Corporations began placing their own instruments on the market and borrowed less from banks; banks chased high-yield loans and increased the range of services offered to increase profit; junk-bond financing provided an easy path to cash; restructuring was a greater source of wealth than business growth; and the voodoo economic gospel of supply-side debt gave no heed to the cost of debt.
99 percent and a weighted average cost of debt of 6.
The Finance Ministry has been allocating most of the budget to cover the cost of debt servicing and the salaries of government employees.
M2 EQUITYBITES-January 10, 2011-Aqua America Inc announces lowerd cost of debt at 5.