Home › BBA Finance › Financial Management › Financial Management › Interest must be paid whether or not a firm earn…
Interest must be paid whether or not a firm earns profit, so debt brings:
AAssured profits
BFree capital
CFinancial risk
DZero obligation
Answer & Solution
Correct answer: C. Financial risk
1. Borrowed funds must also be repaid on time.
2. Default risk is called financial risk.
3. Equity carries no such commitment.
_Source: NCERT Class 12 Business Studies Part II, Chapter 9, Financial Management._
Related questions
Excess cash invested in cash alternatives is said to create:Because payments for purchases are usually made on credit, cash outflows in a month often Assets that turn into cash within a year through normal operations are contrasted with capCash held by a business is needed above all to pay the bills and meet the:Credit taken from suppliers, recorded as accounts payable, is called:Better inventory management, better collections and longer supplier terms together will:Working capital needs that stay in place all year round are described as:Working capital needs that rise and fall with the season are described as: