Match the following.

List-I List-II

a. Net income approach 1. Also known as 'Intermediate Approach'

b. Net operating income approach 2. Change in the capital structure of a company does not affect the market value of the company and overall cost of capital

c. Traditional approach 3. It provide analytical sound and logically consistent behavioural justification for their hypothesis

d. Modigliani Miller approach 4. A firm can minimise the overall cost of capital by using debt financing to the maximum extent

A) a-4, b-2, c-1, d-3 B) a-2, b-1, c-4, d-3 C) a-3, b-4, c-1, d-2 D) a-2, b-1, c-3, d-4

Answer & Solution

Correct Answer: Option A

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List-I	List-II
a. Modigliani Miller approach	1. Commercial papers
b. Net operating income approach	2. Working capital management
c. Short-term money market instrument	3. Capital structure
d. Factoring	4. Arbitrage

List-I	List-II
a. Net income approach	1. Also known as 'Intermediate Approach'
b. Net operating income approach	2. Change in the capital structure of a company does not affect the market value of the company and overall cost of capital
c. Traditional approach	3. It provide analytical sound and logically consistent behavioural justification for their hypothesis
d. Modigliani Miller approach	4. A firm can minimise the overall cost of capital by using debt financing to the maximum extent