Describe how the trade-offs between the different classes


Describe how the trade-offs between the different classes of Agency Conflicts and Costs may produce an Optimal Capital Structure in the context of Jensen and Mecklings’ framework. Explain Michael Jensen’s notions of what types of firms should employ high levels of debt, and which should not. Describe two common bond covenants, and explain how they help to ameliorate conflict between bondholders and stockholders.

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Financial Management: Describe how the trade-offs between the different classes
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