CA Final AFM Practice Questions - CA Final Paper 2 Advanced Financial Management Exam

A firm follows a 'high growth, high risk' strategy. Which financing policy is generally most consistent with it?

Very high financial leverage combined with operating leverage that is already high Issuing only redeemable preference shares at a fixed high coupon Lower reliance on debt to avoid combining high operating risk with high financial risk Distributing 100% of earnings as dividends every year

Correct Answer:

Lower reliance on debt to avoid combining high operating risk with high financial risk

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