The cost of debt financing results from
A) the increased profitability of bankruptcy caused by debt obligations.
B) the agency costs of the lender's monitoring and controlling the firm's actions.
C) the costs associated with managers having more information about the firm's prospects than do investors.
D) all of the above.

Question

Quizplus · Accepted Answer

The cost of debt financing includes the increased risk of bankruptcy, agency costs from lender monitoring, and information asymmetry between managers and investors.

The Cost of Debt Financing Results from