Agency Cost of Debt and Creditors in Bankruptcy

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Match the following terms with their definitions:

Agency cost of debt = Conflict between shareholders and creditors due to differing objectives Debt - Risk-taking = Situation where stockholders take riskier projects than creditors prefer Bankruptcy Cost = Total expected cost of going bankrupt, including direct and indirect costs Capital providers' problem = Divergence of interests between stockholders and creditors

Match the following statements with the correct term:

Creditors lend money to stockholders = Agency cost of debt Stockholders maximize wealth = Agency cost of debt Expected bankruptcy cost function of two variables = Bankruptcy Cost Clash of interests between lenders and stockholders = Capital providers' problem

Match the following situations with the appropriate consequence:

Stockholders invest in risky projects = Debt - Risk-taking Stockholders pay themselves large dividends = Debt - Risk-taking Legal and Deadweight Costs in bankruptcy = Bankruptcy Cost Indirect costs of bankruptcy due to financial trouble perception = Bankruptcy Cost

Match the stakeholder initiative with its corresponding type of additional disclosure:

Sustainability Reports = Link strategy and sustainable results Human Capital Reports = Diversity etc. Climate Change Impact Reports = Potential impacts on the firm from climate change risk External Assessment of ESG = Third-party organizations rate and rank companies on ESG dimensions Signup and view all the answers

Match the challenge faced by directors with the correct solution for increasing transparency:

Lack of uniform disclosure standards = Some companies provide additional disclosure via Sustainability Reports Absence of reliable reporting metrics = Some companies provide additional disclosure via Human Capital Reports Difficulty in assessing stakeholder initiatives = Some companies provide additional disclosure via Climate Change Impact Reports Need for oversight of ESG matters = Some companies provide additional disclosure via External Assessment of ESG Signup and view all the answers

Match the entity with its primary objective:

Stakeholders = Better understanding a company's ESG initiatives Shareholders = Looking to rate and rank companies on ESG dimensions Directors = Facing challenges in providing oversight of ESG matters Third-party organizations = Providing external assessment of ESG Signup and view all the answers

Match the following concepts with their descriptions:

CEO Activism = CEOs taking personal stances on environmental, social, and political issues Debt and Equity Providers = The relationship between debt and equity providers ESG Scores and Risks = Measuring qualitative factors and making them quantitative Credit Rating Agencies = Entities responsible for providing credit ratings for companies Signup and view all the answers

Match the following statements with the correct descriptions:

CEO Activism Public Perception = The public supports CEO advocacy for environmental, healthcare, poverty, and tax issues CEO Activism Contentious Issues = The public is less supportive of CEO activism on gun control, abortion, politics, and religion CEO Activism Impact = Research shows that CEO activism has both positive and negative effects Executive Compensation Tie = Movement to link results to executive compensation, increasing measurement challenges Signup and view all the answers

Match the following factors with their roles:

Role of Debt = Understanding the role of debt in the financial structure Managing Complexity = Handling relationships with various stakeholders effectively Stock Performance Measurement = Quantifying earnings or stock performance for evaluation Auditing Results = Ensuring accuracy and reliability of reported outcomes Signup and view all the answers

Match the following index fund companies with their nickname:

Blackrock = Big 3 Vanguard = Big 3 State Street = Big 3 Fidelity = Big 3 Signup and view all the answers

Match the following companies with their active involvement in advocacy campaigns:

Google = Employee Activism Amazon = Employee Activism Microsoft = Employee Activism Apple = Employee Activism Signup and view all the answers

Match the following stakeholder dimensions with the method used to rate corporations:

ESG Metrics Data providers = Financial reports Signup and view all the answers

Match the following commitments with the respective areas in the Business Round Table statement:

Delivering value to customers = Business Round Table - Purpose Investing in employees = Business Round Table - Purpose Dealing ethically with suppliers = Business Round Table - Purpose Supporting communities = Business Round Table - Purpose Signup and view all the answers

Match the following actions with their impact on shareholders according to the Business Round Table statement:

Transparency and effective engagement = Generating long-term value Supporting communities and protecting environment = Generating long-term value Investing in employees' training and education = Generating long-term value Dealing fairly and ethically with suppliers = Generating long-term value Signup and view all the answers

Match the following companies with their commitment to diversity and inclusion:

Google = Diversity and inclusion Amazon = Diversity and inclusion Microsoft = Diversity and inclusion Facebook = Diversity and inclusion Signup and view all the answers

Match the following credit rating grades with their corresponding default risk level:

AAA = Low default risk BB = High default risk A = Low default risk CC = High default risk Signup and view all the answers

Match the following functions of Credit Rating Agencies with their descriptions:

Providing rating reports = Detailed information on issuer's risk profile Monitoring role = Tracking performance of transactions Calibrating investment decisions = Matching risk-return preferences Unique letter-based scores = Indicating default risk and financial stability Signup and view all the answers

Match the following credit rating agencies with their primary function:

Moody's = Providing credit ratings for securities S&P = Issuing credit ratings for debt instruments Fitch = Evaluating issuer's financial stability Equity Analysts = Analyzing firm's operating conditions Signup and view all the answers

Match the following characteristics of speculative grade securities with their corresponding rating grades:

BBB = Investment grade CC = Speculative grade A = Investment grade B = Speculative grade Signup and view all the answers

Match the following aspects analyzed by Equity Analysts with their focus areas:

Firm's future prospects = Long-term outlook Management team effectiveness = Operating conditions assessment General industry outlook = Industry perspective evaluation Financial conditions evaluation = Immediate future prospects Signup and view all the answers

Match the following roles of Credit Rating Agencies with their impact on investors:

Assisting in informed decisions = Helping investors analyze risks Providing external-governance mechanisms = Serving as equity analysts Giving detailed information on risks = Calibrating investment preferences Tracking transaction performance = Monitoring industry outlook Signup and view all the answers