Financial Distress Has an Impact on the Value of the Firm

question 63

Multiple Choice

Financial distress has an impact on the value of the firm by increasing:

• A)the level of risk aversion of the investors toward the debt of the firm.
• B)its instability.
• C)the probability that it may occur.
• D)all of the above

---

Definitions:

Corporation by Estoppel

A principle where a company is treated as if it is incorporated for purposes of a particular transaction, even though it technically may not be, to prevent injustice or unfairness.

Corporation Names

Legal names under which corporations are registered to conduct business, required to be unique within the same jurisdiction.

Big Box

A big box refers to a large retail establishment, usually part of a chain, that offers a wide variety of merchandise in a single location, typically with a warehouse or department store design.

Nonprofit Corporation

An organization whose primary objective is to support an issue or matter of private interest or public concern for non-commercial purposes, without intending to generate profit for owners.