question_answer

Direction:  In the questions given below are two statements labelled as Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A) The capital structure should involve minimum risk of financial insolvency.

Reason (R) The use of excessive debt threatens the solvency of the company.

Codes

A)                                  Both A and R are true and R is the correct explanation of A

B)  Both A and R are true, but R is not the correct explanation of A

C)  A is true, but R is false

D)  A is false, but R is true