Exemption Clauses Are Generally Strictly Construed Against the Party That

question 37

True/False

Exemption clauses are generally strictly construed against the party that is not seeking to rely on them.

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Definitions:

Levered Firms

Companies that employ debt (loans or bonds) in their capital structure alongside equity (stocks).

Unlevered Firms

Companies that operate without using debt or borrowed capital in their capital structures.

Financial Distress Cost

Expenses associated with a company struggling financially, including legal fees, restructuring costs, and impaired ability to conduct business.

Leverage

The use of borrowed capital or debt to increase the potential return of an investment.