Indirect Bankruptcy Costs

question 371

Multiple Choice

Indirect bankruptcy costs:

• A) Effectively limit the amount of equity a firm issues.
• B) Serve as an incentive to increase the financial leverage of a firm.
• C) Include direct costs such as legal and accounting fees.
• D) Tend to increase as the debt-equity ratio decreases.
• E) Include the costs incurred by a firm as it tries to avoid seeking bankruptcy protection.

---

Definitions:

Freshman Year

The initial year of a student's education in high school or college, marking the beginning of their secondary or higher education journey.

Crises

Points of significant stress or danger in a situation or series of events, requiring immediate and decisive action to resolve.

Candy Store's Shelves

Shelving units within a candy store that display various types of confections for sale to customers.

Renovated Park

A public space that has been upgraded, restored, or improved to enhance its aesthetics and functionality.