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Suppose investors foresee $2 million of legal costs if the firm defaults on its bonds. How does this affect the value of the firms bonds 

Suppose investors foresee $2 million of legal costs if the firm defaults on its bonds. How does this affect the value of the firm""s bonds if bankruptcy occurs? How does the possibility of default affect the interest rate demanded by bond holders today? How does this possibility affect today""s value of the firm""s common stock?

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