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Already, a 30 year loan, i.e., a 30 year refinancing frequency, is rather uncommon.
Note that (Lambda _t^k) in (9) accounts for the maturity structure and refinancing frequency of debt chosen by the firm.
As we are also interested in the deviation caused using the two simplified models of ME and MM policies from the value given the "true" policy of the firm, we consider a levered firm with a refinancing frequency of (k=3) years.
The restriction on corporate taxes allows us to focus on the effects of the refinancing frequency without mixing up with other issues subject to an introduction of personal taxes, e.g., the impact of the dividend distribution policy and the effects of personal taxes on asset pricing under the risk-neutral probability measure.
Similar(56)
The critics also say that the regulations should require stricter review of a borrower's ability to repay and put greater limits on the frequency of refinancing and on the use of so-called discount points.
Refinancing requires some equity.
Southern California Water District, $59.4 million of revenue and refinancing bonds.
Companies have limited choices for refinancing needs.
Already, refinancing activity appears to be slowing.
Is refinancing worth the upfront costs?
If mortgage rates rise, refinancing could slump.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com