Problem: You are the CFO of a company that is capitalized with 50% debt and 50% equity. The debt is in the form of debenture bonds, which have relatively weak indentures. The President and COO, who is also a major stockholder, has proposed issuing new secured bonds and using the cash raised to expand into a potentially profitable but very risky market outside the United States. The CEO has directed you to begin working on a plan to issue the bonds. Is there an ethical problem with the proposal? Why? Who is likely to gain at whose expense? (Hint: How are the ratings of the existing debenture bonds likely to change and how might this affect existing bondholders?)