Which of the Following Statements Is False

question 82

Multiple Choice

Which of the following statements is false?

• A) Calculating the precise present value of financial distress costs is a relatively straightforward process.
• B) Two key qualitative factors determine the present value of financial distress costs: (1) the probability of financial distress and (2) the magnitude of the costs after a firm is in distress.
• C) Technology firms are likely to incur high costs when they are in financial distress due to the potential for loss of customers and key personnel, as well as a lack of tangible assets that can be easily liquidated.
• D) The magnitude of the financial distress costs will depend on the relative importance of the sources of these costs and is likely to vary by industry.

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Definitions:

Hypertonic

A solution with higher osmotic pressure (solute concentration) than another solution, leading cells to lose water.

Isotonic

A solution that has the same salt concentration as cells and blood, preventing net water movement across cell membranes.

NaCl

Sodium chloride, commonly known as table salt, is an ionic compound consisting of sodium and chloride ions.

Solute

Substance that is dissolved in a solvent, forming a solution.