| Direction: Study the following passage carefully and answer the questions given below: |
| Many academics have researched the relevance of capital structure choice and used many drivers to explain the choices of capital structure, being the drivers of cost of debt and capital core focus of many researchers. The companies monitor their capital structure and pay attention to their level of leverage and to drivers that influence their cost of financing. The arguments on the degree of relevance of capital structure are presented first and then the key drivers of capital structure choice used by different researchers and lastly the relevance of and business and industry profitability and risk were considered. |
A) Profitability is the primary goal of a company
B) The level of leverage is assessed by the researchers
C) The capital structure of the company has high relevance
D) (a) and (b)
Correct Answer: C
Solution :
(c) Reasoning type: Inductive Reasoning Focus of the question: Conclusion Relationship analogy: Related Object Analogies The passage conveys that the company's significant focus should be on the structure of the capital flow since it is the life blood of the concern. That's why the degree of relevance of capital structure is presented first and then the key drivers of capital structure choice used by different researchers.
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