F97F.11
11. The underinvestment problem: (4 pts)
a.Is when managers choose to invest in perks like corporate
jets rather than things like new product development
b.Is when managers take projects that fall under their
opportunity cost of capital
c.Is when managers fail to take good projects because bondholders
would gain more than shareholders
d.Is when managers fail to take good projects because bond
covenants prevent them from doing so.