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An agency problem may exist between bondholders and stockholders because stockholders prefer that the firm engage in higher risk, higher expected rate of return business

An agency problem may exist between bondholders and stockholders

because stockholders prefer that the firm engage in higher risk, higher expected rate of return business activities, as compared to bondholders

because bondholders prefer that the firm engage in higher risk, higher expected rate of return business activities, as compared to stockholders

bondholders enjoy limited-liability from the corporation's debts while stockholders do not

stockholders enjoy limited-liability from the corporation's debts while bondholders do not

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