Garcia-Vega, Maria (contributor); … - 2007
that with probability (1 δ− ), the firm can repay its debts, and with probability
δ , it goes bankrupt. In case of …
minimum productivity decreases; and average volatility, increases, stays constant, or does not decrease too much.
These are … cost of obtaining external funds
grows, since lenders expect lower returns from highly volatile firms in the case of …