When the value of the firm is above the face value of the debt:
A) the stockholders repay the debt and the equity is worth less than $0.
B) the stockholders repay the debt and the equity is worth the difference between the firm value and the face value of the debt.
C) the stockholders default and the lenders receive the value of the firm.
D) the stockholders default and the equity is worth $0.
Correct Answer:
Verified
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