One recommendation in the chapter is that companies with promis- ing investment opportunities should strive to maintain

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One recommendation in the chapter is that companies with promis- ing investment opportunities should strive to maintain a conservative capital structure. Yet many promising small businesses are heavily indebted.

a. Why should companies with promising investment opportunities strive to maintain conservative capital structures?

b. Why do you suppose that many promising small businesses appar- ently do not follow this recommendation?AppendixLO1

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