- CFA Exams
- CFA Level I Exam
- Topic 3. Corporate Issuers
- Learning Module 6. Capital Structure
- Subject 2. Factors Affecting Capital Structure
CFA Practice Question
In general, for a start-up company, debt financing is: A. attractive to its lenders.
B. appealing to the company.
C. neither A nor B is correct.
Correct Answer: C
Operating cash flows are usually negative for such companies. Debt financing is very expensive to obtain.
User Contributed Comments 2
| User | Comment |
|---|---|
| aishaoh | what? i thought debt financing is cheaper than equity??? |
| breh | @aishaoh: not always. for such companies there's no positive income and debt financing could be very expensive. |