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Monash bank again is having problem with Company A Ltd.. Now Company A Ltd. owes senior bond holders $75 and Monash bank $500. It still

Monash bank again is having problem with Company A Ltd..

Now Company A Ltd. owes senior bond holders $75 and

Monash bank $500. It still costs Company A Ltd. $15 to run

the company, if it continues, the firm will be worth $520 with

a probability 0.75, otherwise 0. The liquidation of the firm is

$90 and the firm wants to default. Again what should the bank do ?

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