I don’t understand this Business question and need help to study.
John Lee, the CFO of Mpota Limited has just completed a training program on Trade-off theory on capital structure. John Lee is excited about Trade-off theory and has decided to issue shares and use the proceeds to buy back bonds.
(i) Based on your understanding of Trade-off theory, why do you think Mr Lee has decided to issue shares and use the proceeds to buy back bonds?
(ii) Briefly describe 5 issues Mr Lee should consider before he issues shares and use the proceeds to buy back bonds.
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