If an optimal capital structure exists, describe reasons why too little debt is as unwanted as is too much debt?
Too little debt may be as unwanted as too much debt since if a firm contains a very conservative capital structures it may be losing the chance to reap the positive benefits of financial leverage. A company along with a bright future is probably not maximizing shareholder wealth if it contains a very small amount of debt in its capital structure. A more aggressive capital structure may build up more value for the owners.