Managers always attempt to maximize the long-run value of their firms' stocks, or the stocks' intrinsic values. This is exactly what stockholders desire. Thus, conflicts between stockholders and managers are not possible. However, there can be conflicts between stockholders and bondholders.

True/False

There can never be conflicts between stockholders and bondholders, there for the statement is;

False.

Explanation:

Stockholders are people who stocks in a company while the bondholders are those who own bonds issued by a company. A stockholder is someone who buys the share of a company in the form of stocks and thus receives a portion of the company's dividends according to the number of shares he/she owns. The shareholders can also earn profit by selling the shares at a higher price in the secondary market.

A shareholder can be an individual, organization or even a government institution. The shares are always sold to potential investors in the form of common shares and preferred shares. Each of the types of shares provide the company with that is selling the shares with a way of raising funds. They also offer distinct features that are appealing to different investors.

A bondholder lends credit to a company by buying the bonds that the company issues. The major difference between a stockholder and a bondholder is that whereas the former is an owner, the latter is a creditor. The managers usually try to maximize the long-run value of their firms' stocks for the benefit of stockholders. The bondholders provide credit that should be paid after a certain period in time with interest. There can not be any conflicts between the stockholders and bondholders since they have different interests and arrangements.