Question

Which of the following is a factor that contributes to the conflict of interest between a...

Which of the following is a factor that contributes to the conflict of interest between a company's bondholders and its shareholders?

Homework Answers

Answer #1
  • Stockholders have an incentive to take riskier projects than bondholders do. Other conflicts of interest can stem from the fact that bonds often have a defined term, or maturity, after which the bond is redeemed, whereas stocks may be outstanding indefinitely but can also be sold at any point.
  • Bondholders may put contracts in place prohibiting management from taking on very risky projects or may raise the interest rate demanded, increasing the cost of capital for the company. Conversely, shareholder preferences–for example for riskier growth strategies –can adversely impact bondholders.
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Which of the following statements offers the best means of reducing a conflict of interest between...
Which of the following statements offers the best means of reducing a conflict of interest between management and shareholders of a corporation? Group of answer choices A.Reducing the amount of company information available to shareholders so that they are not overloaded with too much material to read B. Organising management’s compensation to consist of a salary only C. Government making takeover laws tighter to reduce the threat of takeovers D. Offering management shares in the company as part of their...
Explain the conflict between stockholders and bondholders.
Explain the conflict between stockholders and bondholders.
What are two ways agency costs, resulting from a conflict of interest between the shareholders and...
What are two ways agency costs, resulting from a conflict of interest between the shareholders and managers, can be minimized by the firm?
What are examples of a possible result of the conflict of interest between shareholders and corporate...
What are examples of a possible result of the conflict of interest between shareholders and corporate managers? Check all that apply: Managers funding risky projects that could lose money. Managers using company resources for personal benefit. Managers paying themselves excessive salaries. Managers faking earnings to temporarily boost the stock price.
Which of the following statements are disadvantages of using bonds to finance a corporation? (i)    A...
Which of the following statements are disadvantages of using bonds to finance a corporation? (i)    A default on the fixed interest payments may result in bankruptcy (ii)   It lowers the rate of return to its shareholders (iii) It creates conflicts between shareholders and bondholders (iv)  It leads to higher tax payments
The possibility of conflict of interest between the owners and management of a firm is called...
The possibility of conflict of interest between the owners and management of a firm is called the agency problem.
question 2 What is the most important factor which contributes to competitiveness? productivity or output per...
question 2 What is the most important factor which contributes to competitiveness? productivity or output per worker hour. government regulations. tariffs and quotas restrictions on investment flows
Once control and ownership are separated a conflict of interest arises between the owners and the...
Once control and ownership are separated a conflict of interest arises between the owners and the people in control of a corporation. TRUE OR FALSE??
Which of the following is true in relation to conflict? a. conflict is always negative b....
Which of the following is true in relation to conflict? a. conflict is always negative b. conflict occurs primarily in unhealthy relationships c. conflict is sign of unprofessional behavior. d. conflict, a natural part of groups, tends to produce stress.
which of the following actions is clearly a conflict of interest? 1) failing to correct or...
which of the following actions is clearly a conflict of interest? 1) failing to correct or report a situation that may endanger the public. 2) making public statements that are not based on firm knowledge and conviction. 3) sealing a drawing by an unlicensed peron not under your direct supervision. 4) Acceoting a secret commisiion from a supplier for buying the supplier's products.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT