The Reluctance to Liquidate Problem Explains That

question 4

Multiple Choice

The reluctance to liquidate problem explains that:

• A)if a firm is on the verge of liquidation,equity holders have a tendency to take on overly risky projects,even when they have negative NPV.
• B)equity holders may want to keep a firm operating when its liquidation value exceeds its operating value.
• C)equity holders have a tendency to take on overly risky projects,even when they have negative NPV.
• D)debt holders may want to keep a firm operating when its liquidation value exceeds its going concern value.

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Definitions:

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