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Sagot :
When securities are priced fairly this would mean that the stock of an organization has gone down considerably. This could also show the chances of bankruptcy.
The original shareholders of a firm pay the present value of bankruptcy and financial distress costs to reduce the cash flow which is available to the investors.
What is financial distress?
- It refers to the lost or reduced income.
- It refers to a condition where the company is unable to generate revenue and profit.
- This happens usually when there are high fixed costs.
- It also refers to a situation when the company cannot pay its creditors back.
To learn more about financial distress visit:
https://brainly.com/question/15314133
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