What Occurs When the Value of a Firm's Debt Exceeds

question 65

Multiple Choice

What occurs when the value of a firm's debt exceeds the value of shareholders' equity?

• A)The firm is bankrupt
• B)The firm is very risky
• C)A high rate of interest is being paid on the debt
• D)The firm is financed more through debt than through equity

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Definitions:

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