Assume a Risky Firm Has Both Bondholders and Stockholders

Assume a risky firm has both bondholders and stockholders.If the firm obtains a government loan guarantee on its existing debt,who will gain from this guarantee?

A) Existing stockholders only
B) Both existing bondholders and stockholders in proportion to the firm's debt-equity ratio
C) Existing bondholders and stockholders on an equal basis
D) Existing bondholders only
E) Future stockholders only

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