Assertion (A): The capital structure should involve minimum risk of financial insolvency. Reason (R): The use of excessive debt threatens the solvency of the company.

CS Executive · Financial and Strategic Management · PYQS · December 2023
Assertion (A): The capital structure should involve minimum risk of financial insolvency. Reason (R): The use of excessive debt threatens the solvency of the company.
(A) Both (A) and (R) are true and (R) is correct explanation of (A)
(B) Both (A) and (R) are true but (R) is not correct explanation of (A)
(C) (A) is true, but (R) is false
(D) (A) is false, but (R) is true

Answer & Explanation:

Correct Answer: Option (A)

Official answer key: (A).

Topics: Financial Management

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