Conflict of interest between stockholders and bondholders

Assignment Help Financial Management

Reference no: EM131945301

There is a conflict of interest between stockholders and bondholders because

A) stockholders can outvote bondholders

B) stockholders have a limited downside and an unlimited upside

C) bondholders can outvote stockholders

D) stockholders only have a residual claim

Part 2 How can bondholders reduce the risk created by the conflict of interest between shareholders and bondholders?

A) Sue the company for breach of trust.

B) Vote against risky projects.

C) Replace the top managers of the company.

D) Use protective covenants.

Reference no: EM131945301

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