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  • Credit derivatives

    Credit derivatives facilitate risk management for banks, insurance companies and corporates and are often used as a means of asset diversification. They also allow financial institutions to detach credit risk from the credit assets they own and thereby separate asset ownership from exposure to the credit risk. This in turn enables the financial institution to reduce their regulatory or economic capital requirements.

  • Cost of debt

    The cost of debt is the average interest rate that a company pays on all of its debt. It calculates the costs associated with each individual form of debt, for example of loans and bonds, and determines the average cost for the entire debt of the company.

  • Equity and debt capital

    When raising funds, companies have the choice between equity, debt and hybrid capital. Each type of capital has its own characteristics and has different implications for the financial structure of a company. The composition of equity and debt will also have an effect on the weighted average cost of capital.