One Reason Why Debt Rescheduling Is Easier Than Debt Repudiation

question 73

True/False

One reason why debt rescheduling is easier than debt repudiation is that many international loan contracts contain cross-default provisions that serve to prevent a country from selecting a group of weak lenders for special default treatment.

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Definitions:

M&M Proposition I

A theory stating that the value of a leveraged firm is the same as the value of an unleveraged firm provided there are no taxes, bankruptcy costs, and asymmetric information.

Debt-Ratio

is a financial metric that compares a company's total debt to its total assets, showing how much of the company's assets are financed by debt.

Capital Structure

Refers to how a firm finances its overall activities and growth through different sources of funds, such as debt and equity.