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Stulz (1990) argues that capital structure choices can lead to both over- and under-investment. Both diversification and convertible debt have been suggested as possible solutions.

Stulz (1990) argues that capital structure choices can lead to both over- and under-investment. Both diversification and convertible debt have been suggested as possible solutions. With reference to any relevant literature discuss the problems identified by Stulz and how diversification and convertible debt can resolve them.

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