Question: Under-investment problems refers to the problem that equity holders prefer not to invest in positive-NPV projects in highly levered firms because a. projects are contingent

Under-investment problems refers to the problem that equity holders prefer not to invest in positive-NPV projects in highly levered firms because

a. projects are contingent on equity financing

B..

future investments are contingent on debt financing.

C. gains are evenly shared between all stakeholders.

D most of the gains from the investment accrue to debt holders.

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