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MULTIPLE CHOICE One of the reasons why KMV includes of long-term debt (LTD) in calculating probability of default is because: - LTD does not matter

MULTIPLE CHOICE

One of the reasons why KMV includes of long-term debt (LTD) in calculating probability of default is because:

- LTD does not matter in bankruptcy decisions. Only STD (short-term debt) matters

- LTD does not matter in bankruptcy decisions because firms can refinance long-term debt at a lower cost

- It assumes that both STD and LTD matter in bankruptcy decisions ??

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