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:

Community

A group of people living in the same place or having a particular characteristic in common, often bound by a sense of unity or shared identity.

Social Exchange Theory

A theoretical framework suggesting that social behavior is the result of an exchange process aiming to maximize benefits and minimize costs to the individuals.

Community Psychologists

Professionals who apply psychological principles and research to assess and improve the well-being of communities and the individuals within them.

Psychological Barriers

represent mental or emotional obstacles that hinder a person's ability to communicate effectively, achieve goals, or fully engage in relationships.