Business, 05.05.2020 05:30 alicia432

7. Which of the following statements is FALSE? A) Debt holders are not foolish—they recognize that when the firm defaults, they will not be able to get the full value of the assets. As a result, they will pay less for the debt initially. B) The costs of financial distress represent an important departure from Modigliani and Miller's assumption of perfect capital markets. C) Levered firms risk incurring financial distress costs that reduce the cash flows available to investors. D) When securities are fairly priced, the original shareholders of a firm pay the future value of the costs associated with bankruptcy and financial distress.

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7. Which of the following statements is FALSE? A) Debt holders are not foolish—they recognize that w...