Which of the following statements is CORRECT? a. Because of their size, large corporations face fewer regulations than smaller corporations and proprietorships. b. Corporations have unlimited liability. c. Corporations are taxed more favorably than 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.

Answer: The following statements is correct: Bond covenants are designed to protect bondholders and to reduce potential conflicts between stockholders and bondholders.

Bond covenants are considered to be part of the judicial bindings that forms up a bond, irrespective of the fact whether it is issued by a institution or the authorities. They are normally supposed to defend capitalist by rendering some certainty on the bond.