Fill in the blanks and anwer the following question.
1. Rosa Espinosa is retiring soon, so she is concerned about her investments providing her steady income every year. She is aware that if interest rates , the potential earnings power of the cash flow from her investments will increase. In particular, she is concerned that a decline in interest rates might lead to annual income from her investments.
2. What kind of risk is Rosa most concerned about protecting against?
O Reinvestment rate risk O Interest rate risk

Which of the following actions would be most likely to reduce potential conflicts of interest between stockholders and managers? a. change the corporation's formal documents to make it easier for outside investors to acquire a controlling interest in the firm through a hostile takeover. b. eliminate a requirement that members of the board of directors must hold a high percentage of their personal wealth in the firm's stock. c. for a firm that compensates managers with stock options, reduce the time before options are vested, i. e., the time before options can be exercised and the shares that are received can be sold. d. pay managers large cash salaries and give them no stock options. e. beef up the restrictive covenants in the firm's debt agreements.