A run on a debt fund

(a) Prove Proposition 6B.10.2. (b) A credit fund's liquidation cost is 4%. Compute the stayers' dilution when 10% and when 30% of units are redeemed. (c) An investor gains 0.6% by staying if nothing goes wrong. Above what expected redemption fraction does she prefer to redeem? (d) The fund holds cash equal to 10% of assets, used first. Derive the dilution for $\rho > h$ when a fraction $h$ of assets is cash, and compute it for $\rho = 30\%$. (e) Use your answers to explain the decision of Franklin Templeton India's trustees on 23 Apr 2020 and the 109% eventual recovery (6B.12.1).