Stockholders can transfer wealth from bondholders through a


Question: Stockholders can transfer wealth from bondholders through a variety of actions. How would the following actions by stockholders transfer wealth from bondholders?

(a) An increase in dividends

(b) A leveraged buyout

(c) Acquiring a risky business How would bondholders protect themselves against these actions?

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Finance Basics: Stockholders can transfer wealth from bondholders through a
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