Assume a risky firm has both bondholders and stockholders. If the firm obtains a government...
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Accounting
Assume a risky firm has both bondholders and stockholders. If the firm obtains a government loan guarantee on its existing debt, who will gain from this guarantee?
Multiple Choice
-
Existing bondholders only
Correct -
Both existing bondholders and stockholders in proportion to the firm's debt-equity ratio
Incorrect -
Existing bondholders and stockholders on an equal basis
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Future stockholders only
-
Existing stockholders only
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