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Which of the following two statements are the channels through which debt mitigates the conflict between managers and investors? (Select all that apply) a. Debt
Which of the following two statements are the channels through which debt mitigates the conflict between managers and investors? (Select all that apply)
a. Debt creates tax shield that benefits shareholders.
b. Debt prevents dilution of ownership which incentivizes large shareholders to monitor more.
c. Debt forces managers to pay out cash flows through interest payment.
d. Debt increases the risk of equity which benefits shareholders.
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