One Method of Preventing or Reducing the Chance That Corporate

question 95

Multiple Choice

One method of preventing or reducing the chance that corporate management will harm the bondholders to the benefit of the stockholders is to:

• A) require that key executives own a certain percentage of the firm's outstanding stock
• B) require that key executives own a certain percentage of the firm's outstanding bonds
• C) write detailed covenants into bond contracts.
• D) all of the above are acceptable methods

---

Definitions:

Independent Variable

The variable in an experiment or study that is manipulated or changed to observe its effects on the dependent variable.

Sum Of Squares

A statistical technique used in regression analysis to determine the dispersion of data points.

Regression

A statistical method used to examine the relationship between one or more independent variables and a dependent variable.

Dependent Variable

The variable in an experimental setting that is expected to change in response to manipulations in the independent variable.