Under which of the following situation, a company is likely to get the benefit of trading on equity? Option 1: Only equity in capital structure Option 2: Return on investment > Cost of debt Option 3: Return on investment < Cost of debt Option 4: Only debt in capital structure

The answer is 'Return on investment > Cost of debt'. View full solution:

CUET Business Studies - Under which of the following situation, a company is likely to get the benefit of trading on equity? | PYQs + Solutions

CUET Business Studies 2022 20 Aug Shift 1

Business Studies

Medium

Only equity in capital structure

Return on investment > Cost of debt

Return on investment < Cost of debt

Only debt in capital structure

✅ Correct Option: 2