## Cost of Debt Formula: The Basics of Forex Trading

The cost of debt formula in forex helps investors calculate the return that they will receive when investing in loan capital. By using the cost of debt formula, investors are able to compare the cost of different debts and determine which is the most cost-effective option. The formula takes into account the interest rate applied to the loan, the currency exchange rates, and the risk-free rate of return. Knowing the cost of debt helps investors make informed decisions on the type of debt they should invest in and the amount they should borrow.