Transfer or Expropriation of Wealth from Bondholders to Stockholders Is

Transfer or expropriation of wealth from bondholders to stockholders is less likely to occur when:

A) subordinated straight debt is issued because the senior bondholders provide protection for the subordinated bondholders.
B) convertible debt is issued because the equity component will reduce agency costs.
C) convertible debt is issued because the holders can more readily sue when a high-risk project is undertaken.
D) subordinated debt is issued because monitoring is much easier when subordinated straight debt is issued.
E) straight debt is issued because there is a clearer distinction between creditors and shareholders.