One of the indirect costs of bankruptcy is the incentive for managers to take large risks. When following this strategy:

a. the firm will rank all projects and select the project which results in the highest expected firm value.

b. bondholders expropriate value from stockholders by selecting high-risk projects.

c. stockholders expropriate value from bondholders by selecting high-risk projects.

d. the firm will always select the lowest-risk project available.

e. the firm will select only all-equity financed projects.