Question
Maria Lim, the CFO of Abyss Limited has just completed a training program on Trade-off theory on capital structure.Maria Lim is excited about Trade-off theory
Maria Lim, the CFO of Abyss Limited has just completed a training program on Trade-off theory on capital structure.Maria Lim is excited about Trade-off theory and has decided to issue bonds and use the proceeds to buy back shares.
(i) Based on your understanding of Trade-off theory, why do you think the CFO has decided to issue bonds and use the proceeds to buy back shares?
(ii) Briefly describe 5 issues the CFO should consider before he issues bonds and use the proceeds to buy back shares.
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Contemporary Financial Management Fundamentals
Authors: R. Charles Moyer, James R. McGuigan, Ramesh P. Rao
1st Edition
0324015771, 9780324015775
