Indirect Bankruptcy Costs

question 49

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 the costs incurred by a firm as it tries to avoid seeking bankruptcy protection.
• D)tend to increase as the debt-equity ratio decreases.
• E)include direct costs such as legal and accounting fees.

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