Which of the following statements is MOST CORRECT?

Select one:

a. The conflicts between bondholders and stockholders can not be reduced with the use of restrictive bond covenants.

b. Managers may not operate in stockholders best interests. As long as managers stay within the law, there are no effective controls that stockholders can implement to control managerial decision making.

c. The threat of takeovers could reduce the agency problem.

d. Agency conflicts between stockholders and managers are not really a problem when non-managers own shares in a firm.

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