if the price of a firm's bond increases, then the group of answer choices expectations of future profits decreases. cost of external funds decreases. cost of external funds increases. expectations of future profits increases.
If the price of a firm's bond increases, then the cost of external fund decreases.
The interest rate you have to pay lenders is the cost of borrowing money, often known as the cost of debt capital. The after-tax cost of debt, kd, is the interest rate, r, multiplied by 1 minus the firm's marginal tax rate, due to the fact that interest expenses are tax deductible.
Finance that comes from outside your company is referred to as external sources of funding. This can refer to funds obtained through loans, investors purchasing stocks and shares, or lines of credit that may be established with banks or other financial organizations.
money coming from outside the company to boost cash flow and help with expansion plans, like a bank loan or bond offering.
Thus this is the meaning of cost of external fund.
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