Business Studies

Business Finance

Medium

Financial leverage is associated with :

(A) Unstable return

(B) Proportion of debt

(C) High investment

(D) Proportion of equity

Choose the correct answer from the options given below:

(A), and (D) only

(A), (B), and (C) only

(B), (C) and (D) only

(B), and (D) only

✅ Correct Option: 4

Financial leverage refers to the proportion of debt in the overall capital of a firm and is computed as $D/E$ or $D/(D+E)$ , where D is debt and E is equity. It is thus associated with the proportions of debt and equity in the capital structure. Hence (B) and (D) only.

2025: 29 May Shift 2

Identify the asset which can be easily converted into cash.

2026: 12 May Shift 1

The factor affecting choice of Capital Structure is:

(A) Tax Rate

(B) Control

(D) Operating Efficiency

Choose the correct answer from the options given below:

2026: 11 May Shift 2

Which of the following factors doesn't affect the capital budgeting decisions?

2025: 31 May Shift 1

Identify the incorrect statement related to the decision of investing in a land by the company, from the options given below:

2022: 15 July Shift 2

A firm's ability to borrow at a lower rate

2025: 24 May Shift 1

Financial leverage is believed to be favorable if:

1. ROI is lower than cost of debt
2. ROI is higher than cost of debt
3. Debt is not easily available
4. If the interest rate is high

Financial leverage is associated with : (A) Unstable return (B) Proportion of debt (C) High investment (D) Proportion of equity Choose the correct answer from the options given below:

Solution

Related questions:

Keyboard Shortcuts

CUET Business Studies Past Year Questions (Topic-Wise)

Financial leverage is associated with :

(A) Unstable return

(B) Proportion of debt

(C) High investment

(D) Proportion of equity

Choose the correct answer from the options given below: