Which of the Following Actions Would Be Most Likely to Reduce

Multiple Choice

Which of the following actions would be most likely to reduce potential conflicts of interest between stockholders and bondholders?

A) Compensating managers with stock options.
B) Financing risky projects with additional debt.
C) The threat of hostile takeovers.
D) The use of covenants in bond agreements that limit the firm's use of additional debt and constrain managers' actions.
E) Abolishing the Security and Exchange Commission.