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We know that possessing common stocks represents the corresponding ownership of that share of the companys assets. Suppose an investor buys 1% of both the

We know that possessing common stocks represents the corresponding ownership of that share of the companys assets. Suppose an investor buys 1% of both the debt and equity of a levered firm, then her payoff will be

A.

1% of the company's profits.

B.

1% of the company's interests expense.

C.

1% of the company's (profits interest expense).

D.

none of the above

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