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Explain the Following as Factors Affecting 'Financing Decision'. State of Capital Markets

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Question

Explain the following as factor affecting 'financing decision'.

State of capital markets

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Solution

State of the capital market: During the boom period, it is easy to receive funds through equity. On the other hand, during a depression, it becomes difficult to receive funds through equity. Under such circumstances, it is preferable to receive funds through debt.

Bullish Market: Equity preferred

Bearish Market: Debt preferred

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Financial Decisions - Financing and Dividend
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2013-2014 (March) Delhi Set 3

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