Which of the following actions would be most likely to reduce

Question

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

a. Including restrictive covenants in the company's bond indenture (which is the contract between the company and its bondholders).

b. Compensating managers with more stock options and less cash income.

c. The passage of laws that make it harder for hostile takeovers to succeed.

d. A government regulation that banned the use of convertible bonds.

e. The firm begins to use only long-term debt, e.g., debt that matures in 30 years or more, rather than debt that matures in less than one year.

Answer

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