Show that in the optimal debt contract, the probability (boldsymbol{beta}_{circ}) defined in (5.8) decreases as (q) increases

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Show that in the optimal debt contract, the probability $\boldsymbol{\beta}_{\circ}$ defined in (5.8) decreases as $q$ increases as stated in the text.

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Theoretical Foundations Of Corporate Finance

ISBN: 97999

1st Edition

Authors: Joao Amaro De Matos

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Question Posted: May 22, 2024 02:01 AM

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Show that in the optimal debt contract, the probability (boldsymbol{beta}_{circ}) defined in (5.8) decreases as (q) increases

Question:

B K (b-1)+b (5.8)

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Theoretical Foundations Of Corporate Finance

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