Sources of Business Finance Test

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Sources of Business Finance Test - 13

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Weekly Quiz Competition

Question 1
1 / -0

The first development bank was ___________________.

A
The Industrial Development Bank of Canada

B
The Industrial Development Bank of U.S.A.

C
The Industrial Development Bank of England

D
The Industrial Development Bank of Japan
Question 2
1 / -0

The short term money market comprises :

A
The call money market

B
The inter-bank deposit market

C
The bills re-discounting market

D
All of the above
Question 3
1 / -0

Which of the following defines a non performing advance?

A
Non-functional assets

B
Obsolete assets

C
Assets transferred to company liquidator

D
Loans becoming overdue beyond 90 days

Solution

Loans becoming overdue beyond 90 days define a non-performing advance. Non-performing advance refers to the advances or loans where the principal amount or interests remain overdue.
Hence, option (D) is the correct answer.
Question 4
1 / -0

A project has an equity beta of 1.2 and debt beta of 0. This project is finance by combination of $$30\%$$ debt and $$70\%$$ equity, then project beta is _______.

A
0

B
1

C
0.84

D
0.64

Solution

$$\beta_p$$ = $$\frac{{\beta equity X E}}{D + E}$$ + $$\frac{{\beta debt X D}}{D + E}$$.
Question 5
1 / -0

From which date have all Banks started sharing their ATM free of cost for transactions?

A
January 1, 2009

B
April 1, 2009

C
July 1,2009

D
September 1, 2009

Solution

Before April 1, 2009, if you had to use the ATM of any bank with whom you don't have any banking relationship, you ended up paying fees
Question 6
1 / -0

X limited issued 10,000 equity shares of Rs.10 each at premium Rs.2 each. The company has incurred issue expenses of Rs.5,000. The equity shareholders expect dividend of $$18\%$$ then cost of capital is ____________.

A
$$18\%$$

B
$$15.65\%$$

C
$$16.65\%$$

D
$$18.65\%$$

Solution

K$$_e$$ = $$\frac{D_1}{NP}$$
Where NP i.(E) Net Proceed of shares = $$\frac{1000 X12 - 5000}{10000}$$
Dividend of a share (D$$_I$$) = Rs. 1.8.
Hence option (B) is the correct answer.
Question 7
1 / -0

Which one is more appropriate for cost of retained earnings?

A
Weighted Average Cost of Capital.

B
Opportunity cost to the firm.

C
Expected rate of return by the investor.

D
None of the above

Solution

Business entities retain some of the profit for future expansion of the business. The cost of retained earnings is the earnings foregone by its shareholders. In other words, the opportunity cost of retained earnings may be taken as the cost of retained earnings.
Hence, option (B) is the correct answer.
Question 8
1 / -0

10,000 debentures of Rs. 150 each at a discount of Rs.10 per share with 10 year maturity. The coupon rate is $$16%$$.The flotation cost is Rs. 5 per debenture. The debenture are redeemable with a $$10\%$$ premium. The corporate taxation rate is $$40\%$$ then the cost of debenture is

A
$$16\%$$

B
$$9.60\%$$

C
$$10.80\%$$

D
$$40\%$$
Question 9
1 / -0

Which of the following is not the fund based business of commercial banks?

A
D.P. Operations

B
Loans

C
Deposits

D
Discounting of Bills
Question 10
1 / -0

Under the factoring arrangement, the factor ________.

A
Produces and distributes the goods or services

B
Make the payment on behalf of the client

C
Collects the client's debt or account receivables

D
Transfer the goods from one place to another

Solution

Factoring is a service whereby the factor is responsible for all the credit control and debt collection from the buyer and it also provides protection from any bad-debt losses to the firm. A business will sometimes factor its receivable assets to meet its present and immediate cash needs.

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Re-Attempt Weekly Quiz Competition

Sources of Business Finance Test - 13

Result

Sources of Business Finance Test - 13

Score

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Rank

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SHARING IS CARING

Question 1

The Industrial Development Bank of Canada

The Industrial Development Bank of U.S.A.

The Industrial Development Bank of England

The Industrial Development Bank of Japan

Question 2

The call money market

The inter-bank deposit market

The bills re-discounting market

All of the above

Question 3

Non-functional assets

Obsolete assets

Assets transferred to company liquidator

Loans becoming overdue beyond 90 days

Solution

Question 4

0

1

0.84

0.64

Solution

Question 5

January 1, 2009

April 1, 2009

July 1,2009

September 1, 2009

Solution

Question 6

$$18\%$$

$$15.65\%$$

$$16.65\%$$

$$18.65\%$$

Solution

Question 7

Weighted Average Cost of Capital.

Opportunity cost to the firm.

Expected rate of return by the investor.

None of the above

Solution

Question 8

$$16\%$$

$$9.60\%$$

$$10.80\%$$

$$40\%$$

Question 9

D.P. Operations

Loans

Deposits

Discounting of Bills

Question 10

Produces and distributes the goods or services

Make the payment on behalf of the client

Collects the client's debt or account receivables

Transfer the goods from one place to another

Solution

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