Which of the following statements is CORRECT?
A) Corporations are taxed more favorably than proprietorships.
B) Corporations have unlimited liability.
C) Because of their size,large corporations face fewer regulations than smaller corporations and proprietorships.
D) Reducing the threat of corporate takeover increases the likelihood that managers will act in shareholders' interests.
E) Bond covenants are designed to protect bondholders and to reduce potential conflicts between stockholders and bondholders.

Question

Quizplus · Accepted Answer

Bond covenants are restrictions placed on a corporation by bondholders to protect their investment. They are designed to reduce potential conflicts between stockholders and bondholders by ensuring that bondholders receive promised payments and are not harmed by decisions made by stockholders or management.

Which of the Following Statements Is CORRECT