it is mentioned that managers often chose too low debt ratios that are sub-optimaland, hence, do not fully exploit the tax advantages of debt. This means that from the perspective of the equity holders, it would be optimalto increase debt ratios, but the managers choose not to dot it.

i) Explainto what purpose managers would chose sub-optimallow debt ratios and, hence, do not fully exploit the tax advantages of debt.

ii)What other action(s) could managers take to serve the same purpose as in i)?