Match List I with List II.

Choose the correct answer from the options given below :

A-III, B-IV, C-II, D-I

The correct answer is option (1)- A-III, B-IV, C-II, D-I.

A. During a bullish phase, equity shares are more easily sold- Stock market condition.
If the stock markets are bullish, equity shares are more easily sold even at a higher price. Use of equity is often preferred by companies in such a situation. However, during a bearish phase, a company, may find raising of equity capital more difficult and it may opt for debt. Thus, stock market conditions often affect the choice between the two.

B. Number of times earnings before interest and taxes cover the interest obligation- Interest Coverage Ratio.
The interest coverage ratio refers to the number of times earnings before interest and taxes of a company covers the interest obligation. The higher the ratio, lower shall be the risk of company failing to meet its interest payment obligations.

C. Regulatory framework- Under SEBI guidelines.
Every company operates within a regulatory framework provided by the law e.g., public issue of shares and debentures have to be made under SEBI guidelines. Raising funds from banks and other financial institutions require fulfillment of other norms. The relative ease with which these norms can, be met or the procedures completed may also have a bearing upon the choice of the source of finance.

D. Expected rate of return by debt providers- Cost of debt.
The cost of debt refers to the effective rate that a company pays on its borrowed funds, or the expected rate of return by debt providers (lenders or bondholders). It is a critical metric for evaluating the financial health of a business, as it represents the cost a company incurs when raising capital through debt financing (such as loans, bonds, or other forms of borrowing).