Without debt in the capital structure, there are no asset substitution or underinvestment problems.

Name: Without debt in the capital structure, there are no asset substitution or underinvestment problems.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Asset substitution and underinvestment problems arise when a firm's capital structure includes debt. Without debt, these problems do not exist because there is no risk of financial distress or the need to prioritize debt payments over investments in new projects.

Without Debt in the Capital Structure, There Are No Asset