Choose the correct answers within the parentheses.

Firms must provide the right incentives if they are to get (shareholders/creditors/managers) to focus on long-run value maximization. Conflicts exist between managers and stockholders and between stockholders represented by managers and (employees/debtholders/customers) Managers' personal goals may compete with shareholder wealth maximization. However, managers can be motivated to act in their stockholders' best interests through (1) reasonable (vacation/compensation/perquisite) packages, (2) firing managers, and (3) the threat of hostile takeovers. If a firm's stock is undervalued, corporate raiders will see it as a bargain and will attempt to capture the firm in a hostile takeover.

(Stockholders/Bondholders) generally receive fixed payments regardless of how the firm does, while (stockholders/bondholders) earn higher returns when the firm's earnings are higher. Investments in (risky/safe) ventures, that have great payoffs to stockholders if successful but threaten bankruptcy if they fail, create conflicts. In addition, the use of additional (equity/debt/assets) increases stockholder- debtholder conflicts. Consequently, bondholders attempt to protect themselves by including (ethics/covenants/compensation) in bond agreements that limit firms' use of additional (equity/debt/assets) and constrain -Select-customers'employees'managers'Item 10 actions.