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ABC Ltd. has Debt Equity ratio of 3:1 whereas Ltd. has Debt Equity ratio of 1:1. Name the advantage ABC Ltd will have over Ltd, when the rate of inter

Monjur Alahi

ABC Ltd. has Debt Equity ratio of 3:1 whereas Ltd. has Debt Equity ratio of 1:1. Name the advantage ABC Ltd will have over Ltd, when the rate of interest is lower than the rate of return on investment of the company.
(a) Trading on equity, (b) Low risk, (c) Low cost of equity , (d) Greater flexibility.


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Salim Ahmed Kawsar

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Correct Answer - a
Trading on equity.

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