saurabhpal49
New Member
Hi David,
In the credit spread calculation it's mentioned that an increase in interest rates will increase the value of firm and decreases the credit spread
however in the unanticipated change in interest rate section, it's mentioned that an increase in interest rate reduces the value of debt which will lead to decrese in value of firm( v=debt+equity)
could you please let me know the difference in both the sentences as it seems contradictory to me
thanks
In the credit spread calculation it's mentioned that an increase in interest rates will increase the value of firm and decreases the credit spread
however in the unanticipated change in interest rate section, it's mentioned that an increase in interest rate reduces the value of debt which will lead to decrese in value of firm( v=debt+equity)
could you please let me know the difference in both the sentences as it seems contradictory to me
thanks