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HCF > Topic 8 Cap Structure IV Debt and Equity Conflicts > Flashcards

Topic 8 Cap Structure IV Debt and Equity Conflicts Flashcards

1
Q

Solutions to cost of debt

A

set different debt maturities and debt covenants

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1
Q

Two main conflicts of interest in D+E

A

Risk Shifting/asset substitution - shareholders gain from debt holders by taking negative NPV projects
Debt overhand- positive NPV projects cannot be funded with new borrowings

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HCF (12 decks)

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