Issuing Debt Provides Incentives for Managers to Run the Firm

Multiple Choice

Issuing debt provides incentives for managers to run the firm efficiently because:

A) debt increases the funds available to managers to run the firm.
B) ownership may remain more concentrated,improving monitoring of management.
C) managers may take actions that benefit shareholders but harm creditors and lower the value of the firm.
D) shareholders prefer to decline new projects to save cash,even if their NPVs are positive.
E) managers will be obligated to run the firm in the interests of bondholders.