Which of the Following Statements Is FALSE

question 8

Multiple Choice

Which of the following statements is FALSE?

• A)The direct costs of bankruptcy are likely to be higher for firms with more complicated business operations and for firms with larger numbers of creditors,because it may be more difficult to reach agreement among many creditors regarding the final disposition of the firm's assets.
• B)In a prepackaged bankruptcy (or "prepack")a firm will first develop a reorganization plan with the agreement of its main creditors,and then file Chapter 7 to implement the plan and pressure any creditors who attempt to hold out for better terms.
• C)A study of Chapter 7 liquidations of small businesses found that the average direct costs of bankruptcy were 12% of the value of the firm's assets.
• D)Studies typically report that the average direct costs of bankruptcy are approximately 3% to 4% of the pre-bankruptcy market value of total assets.

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Definitions:

American Imperialism

A policy aimed at extending the political, economic, and cultural control of the United States government over areas beyond its boundaries.

Benevolent Power

A term used to describe a government or organization exercising power in a kind-hearted or benevolent manner, often with the aim to improve wellbeing.

Insular Cases

Series of cases between 1901 and 1904 in which the Supreme Court ruled that constitutional protection of individual rights did not fully apply to residents of “insular” territories acquired by the United States in the Spanish-American War, such as Puerto Rico and the Philippines.