Question
Suppose we are in perfect capital markets. If an all equity (i.e. unlevered) firm decides to issue long-debt so that its debt to total assets
Suppose we are in perfect capital markets. If an all equity (i.e. unlevered) firm decides to issue long-debt so that its debt to total assets ratio is 2/3, then what is the arbitrage trading a strategy that we should pursue to replicate the return on equity of the levered firm?
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Shipping Finance A Practical Handbook
Authors: Stephenson Harwood
4th Edition
1787421406, 978-1787421400
