All of the Following Are Examples of the Costs of Financial

question 90

Multiple Choice

All of the following are examples of the costs of financial distress except __________________.

• A) Excellent employees find employment elsewhere
• B) Suppliers are reluctant to sell on credit to the firm
• C) Bondholders decide to exercise their call option
• D) Customers may be leery of buying from the firm

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Definitions:

Disposable Income

After income taxes are taken out, disposable income represents the funds available to a household or individual for saving and spending purposes.

APS

Average Propensity to Save, which is the fraction of total income that is saved by an economy or individual.

Income

The financial gain received by an individual or entity, usually in the form of wages, salaries, or returns from investments.

MPC

Marginal Propensity to Consume, which indicates the proportion of additional income that a household is likely to spend on consumption rather than saving.