Relationship Between Interest Rate and Corporate Bond Yield

Magomet Yandiev ()
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Magomet Yandiev: Department of Economics, Lomonosov Moscow State University
Authors registered in the RePEc Author Service: Magomet Iandiev ()

No 6, Working Papers from Moscow State University, Faculty of Economics

Abstract: The author created a model that describes the relationship between the current bank interest rate (rate on loans extended to business entities) and future corporate bond yield (in the text this is formula # 17): Cbank = (k+Cbond)/(1-r). Where: CBank is interest rate on bank loans; CBond is bond yield; r is yield anticipated by shareholders; k is special ratio calculated from the formula # 22 which depends on authorized capital, EBIT, depreciation and income tax rate. Use of the model applied to Russia (calculations of early 2010) has shown that to the beginning of 2011, the financial situation in raw material industries will improve, while in other industries it will aggravate.

Keywords: Bank interest rate; bond yield; yield anticipated by shareholders (search for similar items in EconPapers)
JEL-codes: E44 F47 G12 G21 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2014-01
New Economics Papers: this item is included in nep-acc, nep-cis and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:upa:wpaper:0006

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