General Studies · Sources of Finance
Match the specific financial sources and strategic objectives in LIST-I with their corresponding impacts in LIST-II: LIST-I (Financial Source/Objective) A. Debt Financing (Debentures/Loans) B. Equity Financing (New Shares) C. Retained Earnings D. Optimal Capital Structure LIST-II (Impact/Characteristic) I. Provides a cheaper source of funds but increases financial risk II. Offers a safer alternative for the firm but dilutes ownership control III. Serves as internal funds for future investment and growth IV. Minimises the cost of capital while maximising firm value Choose the correct answer from the options given below:
- 1A-IV, B-III, C-II, D-I
- 2A-III, B-IV, C-I, D-II
- 3A-II, B-I, C-IV, D-III
- 4A-I, B-II, C-III, D-IV✓
Correct answer
A-I, B-II, C-III, D-IV
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