Which two of the following are broad types of costs of financial distress?

Question

Multiple select question.

Reorganization costs

Indirect costs

Direct costs

Liquidation costs

Answer 1

The two broad types of costs of financial distress are:

1. Indirect costs
2. Direct costs

Reorganization costs and liquidation costs can be considered specific examples or categories within these broader types, but generally, financial distress is categorized into direct and indirect costs.