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Senior Debt Rating

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Explain why selecting a target senior debt rating is a reasonable approach to choosing a capital structure. Use an example.

Explain why a target senior debt rating of single-A is a prudent objective when there is only a very limited new issue market for non-investment-grade debt, and when investor willingness to purchase triple-B-rated debt is likely to be highly sensitive to the state of the economy. Use examples and relate it to the current economic conditions.

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The solution examines the senior debt rating. The expert explains why selecting a target senior debt rating is a reasonable approach to choosing a capital structure.

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Selecting a target senior debt rating is a reasonable approach to choosing a capital structure for an organization because these approach, specifically the debt rating, fulfills three of the five primary considerations that affect decisions on what capital structure a business entity adopts. These primary considerations ...

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