Teaching UGC NET Mock Test Series 2025 (Paper 1 & 2) Business Studies Business Finance and Marketing Financial Management
Assertion (A): According to the trade-off theory of capital structure, a company should aim to strike a balance between the benefits and costs of debt financing.
Reason (R): Debt financing provides tax advantages through interest deductibility, but it also exposes the company to financial distress costs.
1
Both the assertion and reason are true, and the reason is the correct explanation of the assertion.
2
Both the assertion and reason are true, but the reason is not the correct explanation of the assertion.
3
The assertion is true, but the reason is false.
4
The assertion is false, but the reason is true.