QUESTION 2 A bankruptcy process is complex, time-consuming, and costly. The costs of bankruptcy include dividend payments raw material costs taxes costs of hiring legal experts, appraisers, and auctioneers QUESTION 3 Aside from direct costs of bankruptcy, a firm may also incur other indirect costs such as loss of dividend receipts loss of customers and loss of suppliers increase in raw material costs loss of interest receipts QUESTION 4 Which of the following statements is FALSE? Debt holders are not foolish-they recognize that when the firm defaults, they will not be able to get the full value of the assets. As a result, they will pay less for the debt initially. QUESTION 3 Aside from direct costs of bankruptcy, a firm may also incur other indirect costs such as loss of dividend receipts loss of customers and loss of suppliers increase in raw material costs loss of interest receipts