The current academic consensus regarding the relevance of bankruptcy costs on capital structure decisions is...
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Finance
The current academic consensus regarding the relevance of bankruptcy costs on capital structure decisions is that
1only the direct costs associated with bankruptcy need be considered since the indirect costs are minor by comparison and are difficult to quantify
2none of the above is true
3expected bankruptcy costs for large, healthy firms are small and probably can be ignored when determining these firms capital structures
4the relevance of bankruptcy costs to a firms capital structure decision is directly proportional to the number of times the firm has filed for bankruptcy in the past
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