________ costs impose several direct and indirect costs,including agency costs,whose insurance could lead to an increase in firm value.
A)Bankruptcy and financial distress
B)Market
C)Input
D)Output
E)Start-up

Question

Quizplus · Accepted Answer

Bankruptcy and financial distress costs refer to the costs associated with potential bankruptcy or financial instability, such as legal fees or lost revenue. These costs can lead to agency costs, which occur when managers prioritize their own interests over the firm's interests. By ensuring that proper insurance is in place to mitigate these risks, firms can potentially increase their overall value. The other choices are not directly related to agency costs.

________ Costs Impose Several Direct and Indirect Costs,including Agency Costs,whose