What are the trade offs in the agency cost

Reference no: EM131328297

1. How can restrictive covenants in bonds be both an agency cost of debt and a way to prevent agency costs of debt?

2. What are the trade-offs in the agency cost/tax shield trade-off model? How is the firm's optimal capital structure determined under the assumptions of this model? Does empirical evidence support this model?

Reference no: EM131328297

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