The explicit costs,such as the legal expenses,associated with corporate default are classified as ________ costs.
A)unlevered
B)beta conversion
C)direct bankruptcy
D)indirect bankruptcy
E)flotation

Question

Quizplus · Accepted Answer

Direct bankruptcy costs refer to the explicit costs associated with corporate default, such as legal expenses and other fees directly related to the bankruptcy procedure. Therefore, the best choice is C - direct bankruptcy costs. The other choices are not relevant to the concept of bankruptcy costs.

The Explicit Costs,such as the Legal Expenses,associated with Corporate Default