Indirect Bankruptcy Costs

question 384

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.

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Definitions:

Gun Control

The set of laws or policies that regulate the manufacture, sale, transfer, possession, modification, or use of firearms by civilians.

Documentary

A non-fictional film or television program intended to document some aspect of reality, primarily for the purposes of instruction, education, or maintaining a historical record.

Opinion

A belief or judgment that rests on grounds insufficient to produce complete certainty and does not necessarily have a basis in fact or knowledge.

Stronger

An adjective indicating greater strength, intensity, or effectiveness in comparison to something else.