Which of the Following Statements Is FALSE

question 4

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:

Conclusion

The final part of something, such as an argument or text, summarizing the main points or deduced results.

Assumption

A thing that is accepted as true or as certain to happen, without proof.

Justification

A reason or argument that explains why a particular action, belief, or statement is reasonable or necessary.

Premise

A prior assertion or claim from which another conclusion is drawn or follows logically.