What is likely to happen in the MM model with a high risk of bankruptcy?

A) It requires almost 100% debt financing.
B) Valuable projects are foregone to preserve cash.
C) Wasteful expenditures are often found.
D) Management buys back shares from the open market.

MM Model

Refers to the Modigliani-Miller theorem, which proposes that under certain market conditions and assumptions, the value of a firm is unaffected by its capital structure.

Bankruptcy Risk

The likelihood that a company will be unable to meet its financial obligations and may have to declare bankruptcy.

Debt Financing

Raising funds through borrowing, typically by issuing bonds or taking out loans, which must be repaid at a later date, usually with interest.