(a) It takes into account long term stability and survival of the firm. (b) It takes care of all other objectives of the firm like exploring and expanding markets, etc. (c) It is based on the assumption of perfect competition in the market. (d) It considers risk along with returns
Statement (I) : A debt-equity ratio of 2 : 1 indicates that for every 1 unit of equity, the company has raised 2 units of debt. Statement (II) : The cost of floating an equity issue is lesser than the cost of floating a debt
Assertion (A) : Invertors in capital market now have higher inclination for investment in debentures. Reasoning (R) : Debentures have active secondary markets now.