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

Question

Quizplus · Accepted Answer

Direct costs of financial distress refer to the explicit costs incurred during corporate default, such as legal expenses, accounting fees, and other costs related to bankruptcy proceedings. The other options are not relevant to this concept.

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