CUET Business Studies 2024 PYQs

$\newline$
1. Cheaper → Lower interest costs
$\newline$
2. Risky → Obligatory payments required
$\newline$

Debt financing is often cheaper than equity because interest rates are typically lower than the cost of equity. However, it is more risky for a business since failing to meet interest and principal payments can lead to bankruptcy. Thus, while debt can be a cost-effective option, it carries significant obligations that must be managed carefully.