Indirect Costs of Financial Distress

Multiple Choice

Indirect costs of financial distress:

A) effectively limit the amount of equity a firm issues.
B) serve as an incentive to increase the financial leverage of a firm.
C) include direct costs such as legal and accounting fees.
D) tend to increase as the debt-equity ratio decreases.
E) include the costs incurred by a firm as it tries to avoid seeking bankruptcy protection.