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The following statements about asset substitution are true except for: Select one: a. A debt covenant that restricts investment opportunities of the entity can reduce
The following statements about asset substitution are true except for: Select one: a. A debt covenant that restricts investment opportunities of the entity can reduce the entity's borrowing costs. b. Lenders are willing to share higher returns earned when managers invest in higher-risk projects. c. Managers have incentives to use debt finance to invest in higher-risk assets with the expectation of obtaining higher returns for shareholders. d. Asset substitution arises when an entity uses borrowed funds
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