Monash bank again is having problem with Company A Ltd.. Now Company A Ltd. owes...
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Accounting
Monash bank again is having problem with Company A Ltd..
Now Company A Ltd. owes senior bond holders $75 and
Monash bank $500. It still costs Company A Ltd. $15 to run
the company, if it continues, the firm will be worth $520 with
a probability 0.75, otherwise 0. The liquidation of the firm is
$90 and the firm wants to default. Again what should the bank do ?
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