Read the following passage and answer the question.

Neeru, the finance manager, and Mani, the managing director of ABCD Ltd., were discussing how to raise funds for modernizing their existing plant. Neeru suggested using equity, pointing out that the Sensex has risen by 6,000 points in the last 4 years. However, Mani wanted to choose debt as the source of finance. The company has high operating costs over time.

Stock market condition is a factor related to...........

Financing decision

The correct answer is option 1- Financing decision.

Stock market conditions directly affect a company's financing decision. When the stock market is performing well, it may be easier for a company to raise funds through equity financing (by issuing shares). Conversely, if the stock market is not performing well, a company might find it harder to raise funds through equity. Thus, stock market conditions influence the choice between equity and debt as sources of finance. So, the correct answer is Financing decision.