General Studies · Capital Structure Theories
Match the Capital Structure Theories and Propositions in LIST-I with their Core Conclusions or Mathematical Relationships in LIST-II: LIST-I (Theory/Proposition) A. Net Income (NI) Approach B. Net Operating Income (NOI) Approach C. MM Proposition I (With Corporate Taxes) D. Traditional Approach LIST-II (Core Conclusion/Relationship) I. VL = VU + (T × D) II. WACC is minimized within a threshold range of moderate leverage. III. WACC decreases as the proportion of debt increases because Ke and Kd remain constant. IV. WACC remains constant as Ke rises to offset the benefits of cheaper debt. Choose the correct answer from the options given below:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1A-I, B-II, C-III, D-IV
- 2A-III, B-I, C-IV, D-II
- 3A-IV, B-III, C-II, D-I
- 4A-III, B-IV, C-I, D-II✓
Correct answer
A-III, B-IV, C-I, D-II
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