What Are Some of the Possible Consequences of Financial Distress

question 10

Multiple Choice

What are some of the possible consequences of financial distress?
I.Bondholders, who face the prospect of getting only part of their money back, will likely want the company to take additional risks.
II.Equity investors would like the company to cut its dividend payments to conserve cash.
III.Equity investors would like the firm to shift toward riskier lines of business.

• A)I only
• B)II only
• C)III only
• D)I and II only

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Definitions:

Ego Integrity

A term from Erik Erikson's theory, referring to the final stage of psychological development in which a person reflects on their life and feels a sense of fulfillment and unity.

Life Span

The maximum length of time that a living being, particularly a human, can expect to live under optimal conditions.

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A broad, comprehensive view or narrative of historical events and trends over a significant period of time.

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Individuals who share a bond of mutual affection, trust, and support, often characterized by companionship and shared interests.