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Sources of Business Finance Test - 1

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Sources of Business Finance Test - 1
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Weekly Quiz Competition
  • Question 1
    1 / -0

    Define the term "ADR"

    Solution

    Explanation:

    These receipts are issued by a non US company to Americans to obtain foreign capital. ADRs are bought and sold in American markets like regular stocks.it can be issued only to American citizens and can be listed and traded on a stock exchange of USA.

     

  • Question 2
    1 / -0

    Expand GDR

    Solution

    Explanation:

    GDR is issued in more than one country for raising shares globally through various stock exchanges.

     

  • Question 3
    1 / -0

    _________ is an example of short term finance

    Solution

    Explanation:

    Trade credit is a short term finance provided by one firm to another for routine business transactions.

     

  • Question 4
    1 / -0

    Why Commercial papers can be issued only by large and creditworthy companies?

    Solution

    Explanation:

    • An unsecured debt is an obligation or debt that does not have specific property (like your house or car) serving as collateral for payment of the debt. If you fail to make payment on an unsecured debt, the creditor cannot take any of your property
    • As the debt raised through commercial paper is totally unsecured, the large and creditworthy firms having good credit rating can issue the CP.

     

  • Question 5
    1 / -0

    Sources of finance can be categorised as _____________

  • Question 6
    1 / -0

    Internal sources of capital are those that are

    Solution

    Explanation:

    These sources are generated by the organisation itself e.g. ploughing back of profits, collection of debtors and receivables.

     

  • Question 7
    1 / -0

    The maturity period of a commercial paper usually ranges from

    Solution

    Explanation:

    The RBI regulates commercial papers. CP is a source of short term finance. The maturity period of CP ranges from 90 days to 364 days.

     

  • Question 8
    1 / -0

    Under the factoring arrangement, the factor

    Solution

    Explanation:

    Factors discount the bills and holds the responsibility of credit control and debt collection from the buyer.

     

  • Question 9
    1 / -0

    Debentures represent

    Solution

    Explanation:

    Debentures come under borrowed funds and are issued for a specified period and to be paid back to the debenture holders after that period

     

  • Question 10
    1 / -0

    Under the lease agreement, the lessee gets the right to

    Solution

    Explanation:

    Lease is an agreement between two parties i.e. Lessor and Lessee for the use of asset in return of periodic payment and for a specified period.

     

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