Indirect Costs of Financial Distress

question 12

Multiple Choice

Indirect costs of financial distress:

• 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) include the costs incurred by a firm as it tries to avoid seeking bankruptcy protection.

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Definitions:

Role Identities

The conceptions held by individuals about who they are in specific roles within their social networks or groups.

Reflected Appraisals

The method through which people create self-images influenced by their assumptions of others' opinions about them.

Racial Identity

An individual's awareness and experience of being a member of a racial group, including the personal significance and social meaning attached to that group membership.

Cultural Exposure

The experience of encountering and interacting with customs, traditions, and practices different from one's own.