GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Risk
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Cost of Capital
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Trading on Equity
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All of the above
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Detailed explanation-1: -Choice of investors. Capital market condition. Period of financing. Cost of financing.
Detailed explanation-2: -Some main factors include the firm’s cost of capital, nature, size, capital markets condition, debt-to-equity ratio, and ownership. However, these factors might help to choose an appropriate capital structure for a business, but checking all the side factors can help adopt more appropriate and accurate adaption.
Detailed explanation-3: -Cost of financing-In a capital structure, the company has to look to the factor of cost when securities are raised. It is seen that debentures at the time of profit earning of company prove to be a cheaper source of finance as compared to equity shares where equity shareholders demand an extra share in profits.