Sources of Business Finance Test

Result

Sources of Business Finance Test - 10

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Weekly Quiz Competition

Question 1
1 / -0

The Lead Bank Scheme was introduced in the year _____________.

A
1960

B
1968

C
1969

D
1972

Solution

Under the lead bank scheme administered by RBI since 1969, a bank leads the consortium of all banks in the area.

The role of lead bank is to coordinate the efforts of all banks in the area for credit expansion to sectors which are important to economy.
Question 2
1 / -0

Commercial paper are generally issued at a price ____________________.

A
Equal to face value

B
More than face value

C
Less than face value

D
Equal to redemption value

Solution

Commercial paper is an unsecured, short term debt instrument issued by a corporation, typically for the financing of account receivable, inventories ad meeting short term liabilities. They are generally issued at a price less than face value.
Question 3
1 / -0

Secured creditors may be __________.

A
Fully secured

B
Partly secured

C
Either (A) or (B)

D
None of the above

Solution

A fully secured creditor is a lender who secures his debt with collateral, such as a mortgage or a lien on personal property.
When a creditor only has collateral for a portion of the debt you owe to him, he is a partially secured creditor. Some partially secured creditors may have requested collateral that they knew would only cover some of the debt while others may have secured their loans with collateral that dropped in value, such as real property.
Question 4
1 / -0

A draft issued by the bank has been lost by the payee. He sends a letter to the issuing bank to stop the payment. The bank will _______.

A
note caution and will advise the payee to contact purchaser of the draft

B
not act on the request

C
stop payment

D
none of the above

Solution

A bank draft is a cheque drawn by the bank out of its own funds which bears more liquidity then a normal cheque. If a draft is lost by the payee and he immediately sends a letter to the bank informing the same then the bank will not his caution and stop the transfer as well as bank will advise the payee to contact the payer for another draft.
Question 5
1 / -0

Match the following items of List-I and List-II in terms of functions of commercial banks:
List-I List-II
(a) Letter of reference 1. Advancing loans
(b) Sale of gold coins 2. Receiving deposits
(c) Recurring Account 3. Non-banking function
(d) Overdrafts 4. Agency function

A
$$(a) - 1, (b) - 2, (c) - 3, (d) - 4$$

B
$$(a) - 4, (b) - 3, (c) - 2, (d) - 1$$

C
$$(a) - 4, (b) - 2, (c) - 3, (d) - 1$$

D
$$(a) - 1, (b) - 3, (c) - 2, (d) - 4$$
Question 6
1 / -0

Funds are raised_____________.

A
From the reinvestment of retained earnings

B
By raising more machinery loans

C
By reducing the value of current assets

D
All of the above

Solution

Funds are the monetary efficiency that is provided to a company for the operation of its day to day a business activities.

These funds can be raised through many resources which includes the reinvestment of the retained earnings of a company, raising loans while the purchase of machinery for the company or through reducing the value of their current asset that is through reducing the requirements of working capital.
Question 7
1 / -0

Which of the following are included under representation functions of a bank?
(i) Payment of cheques and bills
(ii) Providing remittance facilities
(iii) Underwriting of securities
(iv) Advancing clean credit
(v) Allowing overdrafts on current account
(vi) Purchase and sale of securities.

A
(i), (ii), (iii) and (iv)

B
(iii), (iv), (v) and (vi)

C
(i), (ii), (iii) and (vi)

D
(ii), (iii), (v) and (vi)

Solution

option c is correct
Committal bank acts some vital role as a representative of the client. Its Representative functions are given below are-
1.settlement of Transactions - These banks settle different transactions on behalf of the client. It pays bills as rent, interest, profit, salary etc. At the same time, it collects bills.
2.Purchasing and Selling of Shares and Securities - These banks buy sell shares and securities on behalf of the clients. Thus the trade and commerce are expanding.
3. Functions as an Underwriter - Underwriting means buying and selling of shares, securities, etc., on behalf of the clients to provide capital. Commercial banks work as the underwriter for its clients.
4. Acts as Trustee -Taking care of something is known as trusteeship. These banks work as a trustee on behalf of the clients.
5.Money Transfer - Commercial banks transfer money from one branch to another or one bank to another on behalf of the clients. Commercial banks gain a commission by transferring money.
6. An Agent of Central Bank - Commercial banks are acts as an agent of the central bank. The flow of money and credit is done by commercial banks on behalf of the central bank. Where there is no clearinghouse, commercial banks work as the clearinghouse.
7. Safe custody of Money and wealth - Commercial banks look after money and wealth of the clients. It provides the safety of wealth by providing custody, where clients can keep their valuable assets and documents.
8. Maintaining Secrecy - Commercial banks maintain the secrecy of the information of clients. By this create faith in the client.
Question 8
1 / -0

In which of the following long term assets, cost indexation benefit is allowed?

A
Debentures issued by a company

B
Self generated goodwill of a business

C
Bonus shares allotted on $$1-4-2000$$

D
Jewellery
Question 9
1 / -0

The debt can be _____________.

A
Perpetual

B
Irredeemable

C
Redeemable

D
Either perpetual/irredeemable or redeemable

Solution

There are various types of debentures like redeemable, irredeemable/perpetual, convertible, non-convertible, fully secured, partly secured, mortgage, unsecured, naked, first mortgaged, second mortgaged, the bearer, fixed, floating rate, coupon rate, zero coupon, secured premium notes, callable, puttable, etc.
Question 10
1 / -0

The increase in profit return resulting from borrowing capital at a low rate and employing it in a business yielding at a higher rate ____________.

A
Operating leverage

B
Trading on equity

C
Asset leverage

D
Return on investment leverage

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Re-Attempt Weekly Quiz Competition

List-I	List-II
(a) Letter of reference	1. Advancing loans
(b) Sale of gold coins	2. Receiving deposits
(c) Recurring Account	3. Non-banking function
(d) Overdrafts	4. Agency function

Sources of Business Finance Test - 10

Result

Sources of Business Finance Test - 10

Score

-

Rank

-

SHARING IS CARING

Question 1

1960

1968

1969

1972

Solution

Question 2

Equal to face value

More than face value

Less than face value

Equal to redemption value

Solution

Question 3

Fully secured

Partly secured

Either (A) or (B)

None of the above

Solution

Question 4

note caution and will advise the payee to contact purchaser of the draft

not act on the request

stop payment

none of the above

Solution

Question 5

$$(a) - 1, (b) - 2, (c) - 3, (d) - 4$$

$$(a) - 4, (b) - 3, (c) - 2, (d) - 1$$

$$(a) - 4, (b) - 2, (c) - 3, (d) - 1$$

$$(a) - 1, (b) - 3, (c) - 2, (d) - 4$$

Question 6

From the reinvestment of retained earnings

By raising more machinery loans

By reducing the value of current assets

All of the above

Solution

Question 7

(i), (ii), (iii) and (iv)

(iii), (iv), (v) and (vi)

(i), (ii), (iii) and (vi)

(ii), (iii), (v) and (vi)

Solution

Question 8

Debentures issued by a company

Self generated goodwill of a business

Bonus shares allotted on $$1-4-2000$$

Jewellery

Question 9

Perpetual

Irredeemable

Redeemable

Either perpetual/irredeemable or redeemable

Solution

Question 10

Operating leverage

Trading on equity

Asset leverage

Return on investment leverage

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My Perfomance

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