Which of the following statement(s) would you agree with?

I. The higher the volatility of firm's earnings the higher is its probability of bankruptcy at any given level of debt

II. The greater the Free Cash Flow problem in a firm, the smaller is the disciplinary benefit from debt

III. The greater the agency problems between stakeholders and managers, the greater is the disciplinary benefit from debt

IV. Adding debt to the firm's capital structure reduces the agency problem between managers and shareholders but creates an agency problem between shareholders and bondholders

Question 9 options:

	I, III, and IV
	II only
	III and IV only
	I only