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When the value of the firm is above the face value of the debt: O the stockholders default and the lenders receive the value

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When the value of the firm is above the face value of the debt: O the stockholders default and the lenders receive the value of the firm. O the stockholders repay the debt and the equity is worth less than $0. O the stockholders repay the debt and the equity is worth the difference between the firm value and the face value of the debt. O the stockholders default and the equity is worth $0.

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