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.