The more profits are reinvested into the firm, the

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When profits are reinvested into the firm, there is less money available to distribute to stockholders in the form of dividends or buybacks. This means that the value of their shares may not increase as much as it would otherwise. Bondholders, on the other hand, are not directly affected by reinvested profits - as long as the firm is able to meet its debt obligations, they are guaranteed a fixed return. Therefore, the more profits are reinvested into the firm, the less there is available to distribute to stockholders.

The More Profits Are Reinvested into the Firm, the