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One of the indirect costs of bankruptcy is the effect that a potential bankruptcy has on the firm's decisions. The general result is that:
Select one:
A. the firm will select only all-equity financed projects.
B. stockholders expropriate value from bondholders by selecting high-risk projects.
C. the firm will always select the lowest-risk project available.
D. bondholders expropriate value from stockholders by selecting high-risk projects.
E. the firm will rank all projects and select the project which results in the highest expected firm value.
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