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However, they do alter the method of amortizing capitalized debt issuance costs to conform generally to the constant yield to maturity method for OID. Assume a corporation issues an applicable instrument at the beginning of the year with an issue price of $100 and a yield to maturity of 20 percent in a month when the AFR is 9 percent. The rating assigned to the class B notes addresses the likelihood of the payment of amounts to the class B noteholders sufficient to produce a yield to maturity of not less than the class B interest rate if held to the stated maturity. |
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