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6. Which of the following cases that the shareholders would want to call the bond? A. The future obligation of the bond is smaller as

6. Which of the following cases that the shareholders would want to call the bond? A. The future obligation of the bond is smaller as compared to the call price. B. The shareholders want to convert to bondholders. C. The shareholders have extra cash and want to pay back the debt earlier. D. The interest rate in the market is smaller. 7. Which of the following is not a result for having agency cost of debt? A. The firm always prefer borrowing money. B. Debt overhang problem, distorts incentive to invest. C. Risk-shifting problem, riskier projects with lower NPV is chosen. D. The firm does not have 100% debt to capital ratio as predicted by Modigliani and Miller Theorem (with Corporate Taxes)

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