Managers are sometimes accused of being too conservative. If a firm does not borrow as much as

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Managers are sometimes accused of being too conservative. If a firm does not borrow as much as it should to reach its optimal capital structure, what market forces might pressure management to use more debt?

Suppose an all-equity firm is sufficiently profitable that the likelihood of it experiencing a loss in the near future is close to zero. For this firm, what does the marginal benefit curve of debt look like?

Posted Date: May 17, 2024 12:06 PM

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