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Model Paper 2 — Business Studies STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceBusiness StudiesModel Paper 21 Mark
MCQ
Which component of capital structure determines the overall financial risk?
  • A
    Financial need
  • B
    Equity
  • ✓
    Debt
  • D
    Both Debt and Equity
✓

Answer

Correct option: C.
Debt
(c) Debt
Explanation: Debt is cheaper but is more risky for a business because the payment of interest and the return of principal is obligatory for the business.

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