Which of the following statements is FALSE?

A. According to the agency theory between managers and debtholders, the principal as a group is the management of the firm and the agent as a group refers to the debtholders.

B. Covenants in the debt contract between the managers and the debtholders not to pay excessive amounts of dividends to the firms shareholders are meant to reduce the agency costs of debt.

C. Management of a firm that is not forthcoming on the information that is revealed to prospective lenders may not get the funds they need or will have to pay high interest rate on the debt.

D. Management using the debt borrowed to engage in activities that increase the risks of projects that the firm is engaged in and going against the terms of the agreement is an example of the agency problem between managers and debtholders.