Which of the Following Statements Is False

question 42

Multiple Choice

Which of the following statements is false?

• A) The direct costs of bankruptcy are likely to be higher for firms with more complicated business operations and for firms with larger numbers of creditors, because it may be more difficult to reach agreement among many creditors regarding the final disposition of the firm's assets.
• B) In a prepackaged bankruptcy (or "prepack") a firm will first develop a reorganization plan with the agreement of its main creditors, and then file Chapter 7 to implement the plan and pressure any creditors who attempt to hold out for better terms.
• C) A study of Chapter 7 liquidations of small businesses in the U.S. found that the average direct costs of bankruptcy were 12% of the value of the firm's assets.
• D) Studies typically report that the average direct costs of bankruptcy are approximately 3% to 4% of the pre-bankruptcy market value of total assets.

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Definitions:

Cash Register Honesty

The principle or practice of being truthful and accurate in the handling of cash transactions and the management of cash registers.

Self-fulfilling Prophecies

A belief or expectation that an individual holds about a future event that manifests because the individual holds it.

Robert Merton

A prominent American sociologist who contributed to the sociology of science and developed the theory of deviance, including the concept of self-fulfilling prophecy.

Racial Conflict

A type of conflict arising when individuals or groups from different racial or ethnic backgrounds come into opposition or combat due to perceived or actual differences and inequalities.