Which of the following statements is CORRECT? 1One of the ways in which firms ca

Question

Which of the following statements is CORRECT? 1One 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.

2Managerial compensation plans can be used to reduce potential conflicts between stockholders and managers.

3The threat of takeovers tends to increase potential conflicts between stockholders and managers.

4Partnerships generally find it easier to raise large amounts of capital.

Explanation / Answer

2Managerial compensation plans can be used to reduce potential conflicts between stockholders and managers.

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