Which of the following statements are correct? (A) Deciding about the capital structure of a firm involves determining the relative proportion of various types of funds. (B) Capital structure decision is essentially affected by the regulatory framework provided by the law. (C) Capital structure depends on factors like cash flow position, Return on Investment, Cost of debt & Equity etc. (D) Capital structure refers to the mix between reserves and borrowed funds. Choose the correct answer from the options given below:

Option 1 -> Includes statement (D) which incorrectly defines capital structure as mix between reserves and borrowed funds, when it should be debt and equity. Option 2 -> Correctly includes (A), (B), (C) which accurately describe capital structure decisions, regulatory impacts, and key determining factors while excluding the incorrect statement (D). Option 3 -> Includes all statements including (D), which gives an incomplete/incorrect definition of capital structure. Option 4 -> Excludes statement (A) which is a correct and fundamental statement about capital structure decisions, while including incorrect statement (D). Hence, Option 2: (A), (B) and (C) only -> Statement (A) correctly identifies capital structure as determining proportions of various funds; (B) correctly notes regulatory framework influences; (C) correctly lists key factors (cash flow, ROI, cost of debt/equity). Statement (D) is incorrect because capital structure refers to the mix of debt and equity financing, not just reserves and borrowed funds. Reserves are only one component of equity. -> correct