When a Company Whose Ability to Repay Its Obligations in Full

Multiple Choice

When a company whose ability to repay its obligations in full is uncertain borrows funds

A) it will have to issue debt with longer maturities than would a company with a lower probability of default.
B) its bonds will sell for higher prices than would the bonds of a company with a lower probability of default.
C) it must offer investors higher yields to compensate them for the risk they take in buying their bonds or making loans.
D) it must do so through financial markets rather than through financial intermediaries.