Business Studies

Business Finance

Medium

Debt is _ but is more _ for a business, the payment of interest and the return of principal is obligatory for the business.

Cheaper, risky

Cheaper, safe

Expensive, risky

Expensive, safe

✅ Correct Option: 1

Cheaper → Lower interest costs
Risky → Obligatory payments required

Debt financing is often cheaper than equity because interest rates are typically lower than the cost of equity. However, it is more risky for a business since failing to meet interest and principal payments can lead to bankruptcy. Thus, while debt can be a cost-effective option, it carries significant obligations that must be managed carefully.

2026: 13 May Shift 2

"Even business owners who receive detailed financial statements from their accountants ……………". Complete the statement as per passage.

2026: 21 May Shift 1

The decision involving the choice between the right mix of equity financing and debt financing is:

2025: 31 May Shift 1

Which of the following decision is being considered by the management in the above case?

2025: 3 June Shift 2

Identify the correct sequence of the process of financial planning from the options given below:

(A) The preparation of a sales forecast.

(B) Estimates showing expected profits are made to know how much fund requirements can be met internally.

(D) Estimation of the requirement for external funds.

Choose the correct answer from the options given below:

2025: 30 May Shift 1

Higher Debt-Equity Ratio results in ______

2026: 21 May Shift 2

The decision involving identification of various available sources of funds is:

Debt is _______ but is more _______ for a business, the payment of interest and the return of principal is obligatory for the business.

Solution

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CUET Business Studies Past Year Questions (Topic-Wise)

Debt is _ but is more _ for a business, the payment of interest and the return of principal is obligatory for the business.