List-I (Characteristic) | List-II (Concept) |
(A) More debt can be used if debt can be raised at a lower rate | (I) Cost of debt |
(B) Since interest is a deductible expense, cost of debt is affected by the tax rate | (II) Risk Consideration |
(C) If a firm’s business risk is lower, its capacity to use debt is higher and vice-versa | (III) Tax Rate |
(D) A public issue of equity may reduce the management’s holding in the company | (IV) Control |