Which of the following statements is CORRECT? One of the ways in which firms can

Question

Which of the following statements is CORRECT?






One of the ways in which firms can mitigate or reduce potential conflicts between bondholders and stockholders is by increasing the amount of debt in the firm's capital structure.





The threat of takeover generally increases potential conflicts between stockholders and managers.




Managerial compensation plans cannot be used to reduce potential conflicts between stockholders and managers.





The threat of takeovers tends to reduce potential conflicts between stockholders and managers.




The creation of the Securities and Exchange Commission (SEC) has eliminated conflicts between managers and stockholders.

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Explanation / Answer

Well which one is it?

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