Question

What are some of the possible consequences of financial distress?

Question 23 options:

	Debtholders, who face the prospect of getting only part of their money back, are likely to want the company to take additional risks.
	Debtholders would like equity holders to put up more money, even if it is invested in zero-NPV projects.
	Equity investors would like the company to cut its dividend payments to conserve cash.
	Equity investors would like the firm to shift toward less risky lines of business.
	None of the above.

Answer 1

Some of the possible consequences of financial distress include:-

c)

Equity investors would like the firm to shift toward less risky lines of business