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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
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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Corporate Finance Core Principles and Applications
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
5th edition
1259289907, 978-1259289903
