What Are Some of the Possible Consequences of Financial Distress

question 46

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, are likely to 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

---

Definitions:

Environment

The surrounding conditions and factors that affect the living and non-living elements of an organism's or community's existence.

Adoption Studies

Research investigations focusing on the effects of heredity and environment by comparing adopted children to their biological and adoptive parents.

Attributes

Characteristics or qualities that define or identify an individual, object, or concept.

Behaviors

Actions or reactions of an individual or group in response to external or internal stimuli.