Assume risk neutrality, no discounting, and that the firm has a debt payment of 100 due at the end of the year. The table below shows the two potential strategies the firm can take this year. Is there a risk of asset substitution in this scenario? New Risky Strategy Old Strategy (certainty) Success (prob=.5) Failure (prob= 5) Expected Value of Assets 98 106 96 Payoff to Debtholders Payoff to Shareholders No, there is not a risk of asset substitution Yes, there is a risk of asset substitution