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Question

Which of the following sources of capital should not be selected by a business if its fixed cost is high?


A

Preference shares

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B

All of the above

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C

Debentures

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D

Equity shares

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Solution

The correct option is C

Debentures


Answer (c) Debentures

Explanation: Debentures are a debt instrument utilised by organisations and governments to give credit. Debentures are otherwise called a bond that fills in as an IOU among purchasers and issuers. Organisations use debentures when they need to borrow cash at a fixed rate of interest for their development.


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