When is a second break in the MCC likely to occur?

A) As the stock gets continually harder to sell.
B) When debt gets more expensive with increasing financial risk.
C) Never, the MCC generally only breaks once.
D) Somewhat later, but breaks after the first are irrelevant because they're beyond the IOS.

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Rachel Angulo · Accepted Answer

Final Answer : B, Explanation :  A second break in the MCC is likely to occur when debt gets more expensive with increasing financial risk. As the initial break took place due to the underlying value of the collateral decreasing, a second break would likely occur if the financial risk associated with the investment further increases, making the cost of borrowing more expensive.

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When is a second break in the MCC likely to occur?A) As the stock gets continually harder to sell.B) When debt gets more expensive with increasing financial risk.C) Never, the MCC generally only breaks once.D) Somewhat later, but breaks after the first are irrelevant because they're beyond the IOS.

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