Which of the following statements is CORRECT?

A. Compensating managers with stock options will do nothing to help eliminate potential conflicts between stockholders and managers.

B. Conflicts would not exist if the lead agency, the Security and Exchange Commission, were abolished.

C. The threat of takeovers reduces conflict of interest problems, but only between bondholders and stockholders.

D. Restrictions can be included in credit agreements, but these restrictions will do nothing to protect bondholders from conflicts of interest between them and the firms managers and stockholders.

E. Compensating managers with stock options can help reduce conflicts of interest between stockholders and managers, but if the options are all exercisable on a specific date in the near future, this can motivate managers to deceive stockholders.