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MV of debt

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › MV of debt

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by AvatarJohn Moffat.
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  • August 13, 2021 at 8:04 pm #631496
    AvatarJoseph.Andrews
    Participant
    • Topics: 55
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    Is it true that whenever a company is doing bad its MV of Shares goes down; so isn’t it the same with the traded debt that whenever a company’s profit or reputation goes down its MV of Debt goes down and vice versa?

    August 14, 2021 at 11:28 am #631544
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54839
    • ☆☆☆☆☆

    Not unless things were so bad that debt lenders felt the company was about to go bankrupt and would not be able to repay the borrowing.

    Otherwise (and normally) the debt lenders will still be getting the fixed interest each year regardless of how well or badly the company is doing.

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