Which of the Following Statements Is True

Multiple Choice

Which of the following statements is true?

A) Bankruptcy costs do not concern shareholders because they are borne entirely by other parties.
B) Debtholders rarely realise the potential for bankruptcy and do not demand a higher rate of interest on their loans in compensation.
C) Debtholders will not demand higher interest rates on loans because in so doing they may increase the likelihood of bankruptcy.
D) For any given level of business risk,the higher the financial risk,the greater the probability of bankruptcy.