In an agency problem known as asset substitution, the agency cost is paid by:

a. the equity holders, since they will lose all their money whether or not the project is successful.

b. the debt holders, since if the risky project is successful debt holders will receive less money.

c. the equity holders, since the strategy has a negative expected payoff.

d. the debt holders, since if the risky project is not successful debt holders will lose all their money.