The implicit costs associated with corporate default, such as lost sales, are the __________ of the firm.

A) Flotation costs.
B) Default beta coefficients.
C) Direct bankruptcy costs.
D) Indirect bankruptcy costs.
E) Default risk premium.

Indirect Bankruptcy Costs

Expenses related to bankruptcy that are not direct costs such as legal and administrative fees, including damage to corporate reputation and loss of business opportunities.

Corporate Default

A failure of a company to fulfill its financial obligations, such as missing a debt payment.

Lost Sales

Revenue that a company could have earned but didn't, due to stockouts, inadequate capacity, or other factors.