c) Check whether it is actually true that in the situation above, managers of good companies prefer

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c) Check whether it is actually true that in the situation above, managers of good companies prefer to issue convertible debt, and managers of bad companies prefer to issue equity. (This involves checking the conversion decision of debt holders when they learn whether it is a good or a bad company, and the pay offs to managers depending on their choice of financing. The manager gets what's left in year 2 after paying off debt or new equity, and incurs the huge personal loss if the company goes into financial distress). Explain the intuition

Posted Date: Jun 06, 2024 03:13 AM

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c) Check whether it is actually true that in the situation above, managers of good companies prefer

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