Which of the Following Actions Would Be Most Likely to Reduce

question 35

Multiple Choice

Which of the following actions would be most likely to reduce potential conflicts of interest between stockholders and bondholders?

• A) Compensating managers with stock options.
• B) Financing risky projects with additional debt.
• C) The threat of hostile takeovers.
• D) The use of covenants in bond agreements that limit the firm's use of additional debt and constrain managers' actions.
• E) Abolishing the Security and Exchange Commission.

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Definitions:

Conduct

The manner in which individuals behave in a professional setting, often guided by organizational policies and ethical standards.

Business Standards

Established norms and ethical practices that guide the operations and conduct of businesses.

Coordination Dimension

The framework or strategies used in managing or aligning the operations and policies of different teams, departments, or organizations to achieve a common goal.

Global Strategy

A comprehensive plan developed by businesses to operate and compete on an international scale.