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Unformatted text preview: stockholders and bondholders? a. Including restrictive covenants in the company’s bond contract. b. Providing managers with a large number of stock options. c. The passage of laws that make it easier for companies to resist hostile takeovers. d. Statements b and c are correct. e. All of the statements above are correct. Agency Answer: b Diff: E i . Goal of firm Answer: d Diff: E ii . Agency Answer: d Diff: E Both statements a and b are correct; therefore, statement d is the correct choice. The threat of a takeover alleviates the agency problem between managers and stockholders, not between bondholders and stockholders. iii . Agency Answer: a Diff: E Statement a is correct; the other statements are false. Restrictive covenants resolve differences between bondholders and stockholders....
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- Spring '11
- takeover, stockholders, Diff