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2218-Derivatives-2425_T3

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If bondholders could convert each bond into 20 shares of stock at maturity, the value of debt would be closest to:

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In the second project, the debt’s yield is closest to:

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In the first project, the debt’s yield is closest to:

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Given the yields on debt associated with both projects, which is deemed riskier for debtholders?

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If the firm's management wanted to maximize shareholder value, which project should it invest in?

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If the firm chooses the second project, the value of debt is closest to:

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If the firm chooses the second project, the value of equity is closest to:

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If the firm's management wanted to maximize firm value, which project should it invest in?

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If the firm chooses the first project, the value of equity is closest to:

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If the firm chooses the first project, the value of debt is closest to:

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