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Sources of Business Finance Test - 25

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Sources of Business Finance Test - 25
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Weekly Quiz Competition
  • Question 1
    1 / -0
    The advance finance provided by the factor firm is generally available at __________ interest cost than the usual rate of interest.
    Solution
    • Factoring, where firms sell their invoices to a factor firm. They do this for some cash right away. This advance finance provided by by the factor firm is available at a higher rate of interest than usual rate of interest as the availability of finances is very quick and has less waiting period.
  • Question 2
    1 / -0
    Rates of interest offered on public deposits are usually _________ than that offered on bank deposits.
    Solution
    The deposits that are raised by organisations directly from the public are known as public deposits. Rates of interest offered on public deposits are usually higher than that offered on bank deposits. 

    Any person who is interested in depositing money in an organisation can do so by filling up a prescribed form. The organisation in return issues a deposit receipt as acknowledgment of the debt.
  • Question 3
    1 / -0
    _________ is deprived from the residual value of the asset.
    Solution
    In a lease agreement, the owner of the assets is 'lessor' and the party that uses the asset is known as 'lessee'. The lessee pays a fixed periodic amount known as the lease rent to the lessor for the use of the assets. The lessee never becomes the owner of the assets, it is deprived from the residual value of the asset.
  • Question 4
    1 / -0
    The lessee pays a _________ periodic amount called lease rental to the lessor for the use of the asset.
    Solution
    Lease financing is a contractual agreement where by  the owner of the assets is 'lessor' that provides the grant to  the party to use the assets, who is known as 'lessee'. The lessee pays a fixed periodic amount known as the lease rent to the lessor for the use of the assets.
  • Question 5
    1 / -0
    Lease financing enables the lessee to acquire the asset with a ________ investment.
    Solution
    Lease financing in other words is renting of an asset for some specific period. The lessee pays a fixed periodic amount called lease rental to the lessor for the use of the asset. This enables the lessee to acquire  the assets with a lower investment.
  • Question 6
    1 / -0
    Simple documentation makes it easier to finance assets, is a ________ of lease financing.
    Solution
    Lease financing in other words is renting of an asset for some specific period. The lessee pays a fixed periodic amount called lease rental to the lessor for the use of the asset. Therefore simple documentation makes it easier to finance assets and is a merit of lease financing.
  • Question 7
    1 / -0
    Collection of public deposits may prove difficult, particularly when the size of deposits required is _________.
    Solution
    The deposits that are raised directly from the public are public deposits. Any person who is interested in depositing money in an organisation can do so by filling up a prescribed form. the cost of deposits to the company is less than the cost of borrowings from banks. But Collection of public deposits may prove difficult, particularly when the size of deposits required is large.
  • Question 8
    1 / -0
    The deposits that are raised by organisations directly from the public are known as __________.
    Solution
    The deposits that are raised by organisations directly from the public are known as public deposits. Cost of public deposits is generally lower than the cost of borrowings from banks and financial institutions. Public deposits are beneficial to both depositor as well as the organization. 
  • Question 9
    1 / -0
    The owner of the assets is called the _______ while the party that used the asset is known as the ________.
    Solution
    In a lease agreement, the owner of the assets is 'lessor' and the party that uses the asset is known as 'lessee'. The lessee pays a fixed periodic amount known as the lease rent to the lessor for the use of the assets.
  • Question 10
    1 / -0
    The risk of obsolescence is borne by the _________.
    Solution
    A lease is a contractual agreement where by one party i.e., the owner of an asset grants the other party the right to use the asset in return for a periodic payment. 
    The owner of the assets is called the‘lessor’ while the party that uses the assets is known as the ‘lessee’. The risk of obsolescence is borne by the lesser.
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