Gujarat BoardEnglish MediumSTD 12 CommerceOCMFINANCIAL MANAGEMENT3 Marks
Question
“Without study of financial market, capital structure cannot be formed.”-Explain.
✓
Answer
Boom and depression are found in financial market.
Prices go up during market fully, so company earns good profit.
Investors invest in quality to get high dividend considering this point financial management increase capital in equity shares.
Curing recession prices come down and the profit of the company reduces and shares holders get less dividend and sometimes they may not get any dividend.
Investors invest in debenture to steady interest income.
So financial market include debentures in capital structure.
In short, market study is necessary to include various types of securities in capital structure.
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