Relationship Between Interest Rate and Corporate Bond Yield

The author has created a model that describes the relationship between the current bank interest rate (rate on loans extended to business entities) and future corporate bond yield (in the text this is formula # 17): Cbank = (k Cbond)/(1-r). Where: CBank is interest rate on bank loans; CBond is bond yield; r is yield anticipated by shareholders; k is special ratio calculated from the formula # 22 which depends on authorized capital, EBIT, depreciation and income tax rate. Use of the model applied to Russia (calculations of early 2010) has shown that to the beginning of 2011, the financial situation in raw material industries will improve, while in other industries it will aggravate