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

Question

Quizplus · Accepted Answer

Direct bankruptcy costs are the expenses incurred by a company when it goes bankrupt, including legal and administrative costs associated with the bankruptcy process. These are explicit costs that directly result from the default.

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