Asset Substitution Problem
Asset Substitution Problem definition :
Arises when the stockholders substitute riskier assets for the firm's existing assets and expropriate value from the debtholders.
What's A Spread?
Asset substitution
Occurs when a firm invests in assets that are riskier than those that the debtholders expected.
? Mentioned in
Asset substitution problem ...
Asset substitution problem
Arises when the stockholders substitute riskier assets for the firm's existing assets and expropriate value from the debtholders.
Underinvestment problem The mirror image of the asset substitution problem, in that stockholders refuse to invest in low-risk assets to avoid shifting wealth from themselves to debtholders.
The mirror image of the asset substitution problem, wherein stockholders refuse to invest in low-risk assets to avoid shifting wealth from themselves to the debtholders.
Underlying ...
 See also: Substitution, Banks, Expense, Asset class, Capitalized
  
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