One Method of Preventing or Reducing the Chance That Corporate

question 56

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

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Definitions:

Resources

Resources refer to the stock of materials, energy, services, and other assets that can be drawn upon by a person or organization to function effectively.

Growth Capacity

The potential of an entity or environment to expand, increase, or develop further, often measured in terms of productivity or population.

Environment Capacity

The maximum population size of a species that the environment can sustain indefinitely, given the food, habitat, water, and other necessities available in the environment.

Supply Of Resources

The availability or provision of natural, economic, or human elements necessary for production or survival.