If a Firm Has Debt Outstanding the Contingent Claim of an Equityholder

question 4

Multiple Choice

If a firm has debt outstanding the contingent claim of an equityholder is:

• A) equal to the payment to the debtholders
• B) equal to the firm cashflows minus the fixed debt payment if the residual cashflows are positive
• C) equal to the firm cashflows minus the fixed debt payment whether positive or negative
• D) equal to the debt payment plus the residual cashflow of the firm.

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