1. What are the main control rights of debt and equity?
2. When are the incentives to control agency conflict strongest? Why? Can you give a numerical example?
3. What limits are there to writing a corporate charter that eliminates future agency conflicts?
4. Reconsider the example in which you have to waste $10 million in order to get $30 million in loot. External shareholders receive 41.7% of the firm in exchange for $25 million in funding. Would it be in your interest after the fact (ex-post) to avoid the $10 million deadweight loss and thus forego the $30 million in theft, if your investors do not fully trust you?