Which of the Following Statements Is CORRECT

question 39

Multiple Choice

Which of the following statements is CORRECT?

• A) One of the ways in which firms can mitigate or reduce potential conflicts between bondholders and stockholders is by increasing the amount of debt in the firm's capital structure.
• B) The threat of takeover generally increases potential conflicts between stockholders and managers.
• C) Managerial compensation plans cannot be used to reduce potential conflicts between stockholders and managers.
• D) The threat of takeovers tends to reduce potential conflicts between stockholders and managers.
• E) The creation of the Securities and Exchange Commission (SEC)has eliminated conflicts between managers and stockholders.