Competing interests of bondholders and shareholders

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Reference no: EM131315118

Bondholders look forward to a promised set of cash flows from the company. As long as those cash flows can be delivered, bondholders are happy. Shareholders, on the other hand, want the company to go for broke, sometimes taking big risks in hopes of big returns—because shareholders are the ones who benefit from those potential windfalls. How should the company’s managers balance the competing interests of bondholders and shareholders?

Reference no: EM131315118

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