Teaching UGC NET Mock Test Series 2025 (Paper 1 & 2) Business Finance Capital budgeting decisions Dividend decision
Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R). Read the statements and choose the correct answer using the code given below.
Assertion (A): As per M-M hypothesis the value of the levered firm is equal to the value of the unlevered firm.
Reason (R): The process of arbitrage becomes applicable in such situations.
1
Both (A) and (R) are correct and (R) is the right explanation of (A).
2
Both (A) and (R) are correct, but (R) is not the right explanation of (A).
3
(A) is correct, but (R) is incorrect.
4
Both (A) and (R) are incorrect.