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Sources of Business Finance Test - 28

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Sources of Business Finance Test - 28
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Weekly Quiz Competition
  • Question 1
    1 / -0
    Internal strategy of a business invariably takes care of ________________.
  • Question 2
    1 / -0
    Equity shares are suitable for investors who are willing to assume risk for ________ returns.
    Solution
    Equity shares represent the ownership of the company. Equity share holders do not get a fixed dividend but are paid on the basis of earnings by the company.  They enjoy the rewards as well as bear the risks of theownership. Hence, Equity shares are suitable for investors who are willing to assume risk for higher returns.
  • Question 3
    1 / -0
    The debentures which are duly recorded in the register of debenture holders maintained by the company and which can be transferred only through a regular instrument of transfer are called as _________ debentures.
    Solution
    Registered debentures are duly recorded in the register of debenture holders. It is maintained by the company and which can be transferred only through a regular instrument of transfer.
  • Question 4
    1 / -0
    Debenture holders are termed as __________ of the company.
    Solution
     The debenture issued by a company is an acknowledgment that the company has borrowed a certain amount of money,which it promises to repay at a future date. Debenture holders are, therefore,termed as creditors of the company.
  • Question 5
    1 / -0
    ___________ debentures are which create a charge on the assets of the company, thereby mortgaging the assets of the company.
    Solution
    Secured debentures are debentures secured by a charge on the fixed assets of the issuer company. For instance, mortgage debentures secured on land of the company. When the issuer company fails on payment of either the principal or interest amount, the assets of the company can be sold to repay the liability to the investors.
  • Question 6
    1 / -0
    A company can raise funds through issue of debentures, which bear a ________ rate of interest.
    Solution
    Debentures can be issued by a company to raise funds as long term debt capital, which the company promises to return back on a fixed rate of interest. 
  • Question 7
    1 / -0
    Debentures are an important instrument for raising _______ term debt capital.
    Solution
    Debentures are an important instrument for raising long term debt capital. a debenture issued by a company represents that the company has borrowed some amount of capital and the company promises to return them on a fixed rate of interest.
  • Question 8
    1 / -0
    Debentures are _______ charge funds and do not participate in ________ of the company.
    Solution
    Debentures are fixed charge funds i.e they are to be returned on a fixed interest and not as per the profits earned by the company. Hence they do not participate in the profit share of the company.
  • Question 9
    1 / -0
    The debentures that are transferable by mere delivery are called as __________ debentures.
    Solution
    The debentures which are payable to bearer and whose names do not appear in the register of debenture holders are known as “Bearer Debentures”. Coupons for interest are attached to the document and interest is paid to the holders as it falls due. Bearer Debentures are transferable by mere delivery.
  • Question 10
    1 / -0
    ___________ debentures are those that do not carry any charge or security on the assets of the company.
    Solution
    Unsecured debentures are debentures that are not supported by a collateral security. No specific assets will be set aside against unsecured debentures. It is basically a loan with out any protection. They are backed only by the general creditworthiness of the issuer.
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