The implicit costs associated with corporate default, such as lost sales, are the __________ of the firm.
A) Flotation costs.
B) Default beta coefficients.
C) Direct bankruptcy costs.
D) Indirect bankruptcy costs.
E) Default risk premium.

Question

Quizplus · Accepted Answer

Indirect bankruptcy costs include the implicit costs associated with corporate default, such as lost sales, damage to reputation, and the loss of customers or suppliers, which can significantly impact a firm's value beyond the direct legal and administrative costs of bankruptcy.

The Implicit Costs Associated with Corporate Default, Such as Lost