Match List - I with List - II.
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List - I (Capital structure theories) |
List - II (Explanation) |
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|
A. |
Net Income approach |
I. |
Provide a behavioural justification for the irrelevance capital structure. They maintain that the cost of capital and value of the firm do not change with change in leverage. |
|
B. |
Net operating income approach |
II. |
Marginal real cost of debt will be equal to the real of equity |
|
C. |
Modigilani and Miller approach |
III. |
Capital structure is relevant as it affect the cost capital and value of firm |
|
D. |
Traditional approach |
IV. |
Capital structure decision of a corporate does not cost of capital and value of firm. |
Choose the correct answer from the options given below:
1
A - I, B - II, C - III, D - IV
2
A - IV, B - III, C - II, D - I
3
A - III, B - IV, C - II, D - I
4
A - III, B - IV, C - I, D - II