a. If the probability of default is high, managers and stockholders will be tempted to take on
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b. If the probability of default is high, stockholders may refuse to contribute equity even if the firm has safe, positive-NPV opportunities.
c. When a company borrows, the expected costs of bankruptcy come out of the lenders' pockets and do not affect the market value of" the shares.
True or false?
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Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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