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A position when a… (Class 12 Business Studies 2026, Q12)

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Business StudiesCBSE Class 12 · Board exam 2026, set 66/1/1 · 1 mark · MCQ

CBSE Class 12 Business Studies 2026: question 12

Set in the CBSE Class 12 board exam of 2026, paper 66/1/1, section A, question 12, for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q12 · 1 mark · MCQFinancial Management

A position when a company is unable to meet its fixed financial charges like interest payment, dividend on preference shares and repayment obligations is referred to as ______ .

  1. (A)Trading on equity
  2. (B)Financial risk
  3. (C)Business risk
  4. (D)Operating risk

Source: official question paper from cbse.gov.in (PDF). See it in the full 2026 board paper, set 66/1/1.

Hints

Open one hint at a time and try again before the next.

Hint 1

Is the risk caused by operations or by borrowing?

Hint 2

More debt means higher fixed charges.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Fixed financial charges (interest, preference dividend, repayment) must be paid whatever the earnings.

  2. The chance that a company cannot meet these fixed financial charges is financial risk. Option (B).

    1 mark

Answer: (B) Financial risk

Where the marks are

  • Inability to meet fixed financial charges (1 mark)

Revise the chapter

Practise this chapterBoard-style questions from Financial Management, one at a time, marked against the answer key and marking points.Back to the full paper2026 board paper, set 66/1/1: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.