Bond-refunding problem and capital budgeting decision


Question 1: Explain how the bond-refunding problem is similar to a capital budgeting decision?

Question 2: If common stockholders are the owners of the company, why do they have the last claim on assets and residual claim on income?

Question 3: As an investor which type of security would you prefer to own and why?

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Finance Basics: Bond-refunding problem and capital budgeting decision
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