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1:15
YouTube
Finance & Investments with Michael
How Government Deficits Affect the Cost of Capital — A Finance Perspective
When governments run deficits, they compete with corporations for the same pool of capital. Massive bond issuance floods the market, pushing yields up across the entire risk-free curve. A higher risk-free rate means a higher discount rate — and lower present value of future cash flows. For corporate finance, this raises the cost of debt and ...
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