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Capital structure and leverage decisions come in the ambit of
Question



Capital structure and leverage decisions come in the ambit of

A.

Investment decisions

B.

Distribution decisions

C.

Financing decisions

D.

Dividend decisions

Correct option is C

Capital structure and leverage decisions are part of financing decisions. These decisions determine the mix of debt and equity financing that a firm will use to fund its operations and growth. Financing decisions aim to optimize the cost of capital and manage financial risk, which directly impacts the overall value of the firm.
Information Booster:
· Capital structure refers to the proportion of debt and equity in a firm's overall funding.
· Leverage measures the use of debt in financing decisions and affects the firm's financial risk and return on equity.
· Key factors influencing financing decisions include the cost of debt, tax benefits, and market conditions.
Additional Knowledge:
· (a) Investment decisions: Focus on the allocation of funds to long-term assets, such as capital budgeting decisions.
· (b) Distribution decisions: Relate to how the firm allocates resources or products to customers.
· (d) Dividend decisions: Involve the distribution of profits to shareholders and are separate from financing decisions.

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