The Free Cash Flow to Equity (FCFE) Approach Uses Only

question 11

Multiple Choice

The free cash flow to equity (FCFE) approach uses only the portion of the cash flows that are available:

• A) for distribution to bondholders.
• B) for distribution to bondholders and stockholders.
• C) for distribution to stockholders.
• D) for distribution to board of directors.

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Definitions:

Bankruptcy Prospect

The potential or likelihood of a person or entity being declared legally unable to pay their debts.

Bargaining

The process of negotiating the terms of a contract or agreement between parties with different objectives.

Creditors

Entities or persons to whom money is owed by another entity or person.

Bankruptcy Law

The area of law that deals with the legal process for businesses or individuals unable to repay their outstanding debts.