The explicit costs associated with corporate default, such as legal expenses, are the ________ of the ﬁrm.
A) Flotation costs.
B) Default beta coeﬃcients.
C) Direct bankruptcy costs.
D) Indirect bankruptcy costs.
E) Default risk premium.

Question

Quizplus · Accepted Answer

Direct bankruptcy costs refer to the explicit costs associated with corporate default, such as legal expenses. The other choices are not directly related to the question of explicit costs associated with default.

The Explicit Costs Associated with Corporate Default, Such as Legal