David says: A question I answered incorrectly and left some people scratching their heads - "How can a BDC distribute dividends at 10%? They must be charging usery rates on their loans!" It's a very good question.They borrow at low fixed rates, typically 2-3%, then issue floating rate loans at typically 6-8%. The difference becomes their revenue. After expenses, 90% of their cash flow is then distributed as dividends. But the yield on the stock is set by the stock price in response to the market's risk assessment. As the stock price goes up or down in response to business conditions, the yield adjusts accordingly. Therefore, the yield on the stock is a reflection of the stock's risk, NOT simply the company's loan spreads.