Because a bond's rating serves as an indicator of its default risk, the rating has a direct, measurable influence on the firm's:
A. earnings per share and thus the dividends it pays each year.
B. cost of using such debt and thus the bond's interest rate.
C. ability to procure raw material for production.
D. tax liability to the federal government.
E. current assets and the bond's maturity value.
Answer: B
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