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MCQs on Capital Structure
Capital Structure is a combination of financial instruments like equity shares, preference shares, long-term loans,
debentures, bonds or retained earnings that a business uses to raise funds for its operations. These long-term
options help firms carry out their economic activities to generate profits.
Below are some multiple-choice questions and answers on Capital Structure (https://byjus.com/commerce/capital-
structure/) to help students understand the topic:
1. Which of these is not a part of Capital Structure?
a. Equity Shares
b. Debentures
c. Short-term borrowings
d. Bonds Register Now (https://www.playosmo.com/en/?utm_source=b
Answer: c
7. To get a broad idea of the risk profile of a business, one should look at their ________
a. Capital structure
b. Dividend policy
c. Profit and loss statement
d. None of the above
Answer: a
10. Which of the above factors helps to determine the capital structure of a firm?
a. Government policies
b. Degree of Control
c. Cost of capital
14. ___________ and ____________ are two financial instruments that carry a fixed rate of interest and they have
to be paid off regardless of whether the firm earns revenue or not.
a. Equity Shares, Preference Shares
b. Equity Shares, Debentures
c. Bonds, Debentures
d. Equity Shares, Bonds
Answer: c
15. Which of the following methods should a company use to improve (lower) its debt to equity ratio?
a. Buy common stock
b. Shift long-term debt to short term debt
c. Borrow more
d. Shift short-term debt to long-term debt
Answer: a
16. The claims by preferred shareholders on a firm’s assets and income come ________ those of ordinary
shareholders and ________ those of creditors.
a. Before; also before
b. After; after
c. Before; after
d. After; before
Answer: c
19. The equity shares of a company must give a higher return than debt because:
a. Bonds require a market premium
b. Demand for equity shares is greater than bonds
c. Demand for equity shares is lesser than bonds
d. Equity shares involve more systematic risk
Answer: d
20. Which of these options, apart from cash, are instruments to distribute profits to shareholders?
a. Stock purchase
b. Bonus shares
c. Stock split
d. All of the above
Answer: d
Revenue Deficit
IND AS Applicability
(https://byjus.com/commerce/measures-of-
government-deficit/) (https://byjus.com/commerce/applicability-of-ind-as/)
Types Of Organisation
Ledger Meaning (https://byjus.com/commerce/ledger-
(https://byjus.com/commerce/types-of-organisation-
in-accounting/)
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structure/)
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