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1- Management may expropriate wealth from bondholders to shareholders through which of the following actions: a- take on new ventures with much greater risk than
1- Management may expropriate wealth from bondholders to shareholders through which of the following actions:
a- take on new ventures with much greater risk than was anticipated by creditors.
b- take on more debt to increase the returns to shareholders.
c- issue more stock than was anticipated by creditors.
2- Which of the following mechanisms is not used by shareholders to get managers to act in shareholder's best interests?
a- Threat of firing
b- Managerial compensation.
c- Golden parachute.
d- Threat of takeover.
e- Answers b and c above.
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