Sources of Business Finance Test

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Sources of Business Finance Test - 31

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Weekly Quiz Competition

Question 1
1 / -0

What will happen when the Reserve bank lowers the reserve requirement ?

A
investors will purchase" open market" bonds

B
banks must hold less money

C
people will deposit more money

D
banks will create more money
Question 2
1 / -0

For a company to be subsidiary, the other company should hold _____% of its shares.

A
More than 50

B
More than 40

C
More than 30

D
More than 20

Solution

For a company to be subsidiary, the other company should hold 50% of its shares. The subsidiary company is also known as the nominee of the holding company.
Question 3
1 / -0

Which of the following statement correctly describes debentures?

A
Income bonds that require interest payments only when earnings permit

B
Income bonds that are not require interest payments only when earnings permit

C
Subordinated debt and rank behind convertible bonds

D
A form of lease financing similar to equipment trust certificates
Question 4
1 / -0

The main source of profits to commercial banks is _____________.

A
the service charges on bank accounts

B
the interest earned on their loans.

C
The proceeds from home and card foreclosures.

D
The interest re earned on the securities
Question 5
1 / -0

A commercial bank is a financial institution which provides __________.

A
consumer loans

B
business loans

C
savings account

D
all of the above

Solution

A commercial bank is that financial institution which accepts deposit from people and offers loan for the purpose of consumption or investment. Commercial banks provide consumer loans for the purpose of consumption of goods and services in the economy, business loan for the purpose of investment on the production and distribution of goods and services in the economy and savings account facility where they accept deposits from people who want to create savings against a nominal rate of interest.
Question 6
1 / -0

Which of the following items is not an appropriation of profit for a limited company?

A
Preference shares dividend payable

B
Ordinary dividend payable by the company

C
Income tax payable by the company

D
Debenture interest payable

Solution

Interest on debenture is a charge opposite to the profit of the enterprise and has to be paid whether the enterprise has acquired any profit. It is calculated at a fixed rate on the nominal value of debentures.
Question 7
1 / -0

Which of the following statement correctly describes debentures?

A
Income bonds that require interest payments only when earnings permit.

B
Income bonds that are not require interest payments when earnings permit.

C
Subordinated debt and rank behind convertible bonds.

D
A form of lease financing similar to equipment trust certificates.
Question 8
1 / -0

Call is the opposite of ___________.

A
Equity

B
Bid

C
Ask/offer

D
Not equal
Question 9
1 / -0

Pay in slips are NOT used for depositing money in _________.

A
Current account

B
Saving account

C
Fixed deposit account

D
None of the above

Solution

Pay in slips are used to deposit cash/cheque in the banks. It contains all the relevant information like date, account number, account name, type of account. currency denomination, cheque number, drawee bank etc.

Fixed deposit account are created by two ways, either giving the debit instructions to the bank or providing a cheque in favor of bank.
Question 10
1 / -0

Banks decrease the rate of interest for borrowing because the banks are holding excess reserves as business firms and consumers are not willing to borrow money. A decrease in the discount rate is likely to

A
not change the money supply because banks already have excess reserves which they cannot lend.

B
As borrowing money from banks will become difficult people will start depositing more money with the banks.

C
There will be a sharp increase in the deposits made by the business firms as the rates of loans given by banks has fallen sharply.

D
None of the Above

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Re-Attempt Weekly Quiz Competition

Sources of Business Finance Test - 31

Result

Sources of Business Finance Test - 31

Score

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Rank

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SHARING IS CARING

Question 1

investors will purchase" open market" bonds

banks must hold less money

people will deposit more money

banks will create more money

Question 2

More than 50

More than 40

More than 30

More than 20

Solution

Question 3

Income bonds that require interest payments only when earnings permit

Income bonds that are not require interest payments only when earnings permit

Subordinated debt and rank behind convertible bonds

A form of lease financing similar to equipment trust certificates

Question 4

the service charges on bank accounts

the interest earned on their loans.

The proceeds from home and card foreclosures.

The interest re earned on the securities

Question 5

consumer loans

business loans

savings account

all of the above

Solution

Question 6

Preference shares dividend payable

Ordinary dividend payable by the company

Income tax payable by the company

Debenture interest payable

Solution

Question 7

Income bonds that require interest payments only when earnings permit.

Income bonds that are not require interest payments when earnings permit.

Subordinated debt and rank behind convertible bonds.

A form of lease financing similar to equipment trust certificates.

Question 8

Equity

Bid

Ask/offer

Not equal

Question 9

Current account

Saving account

Fixed deposit account

None of the above

Solution

Question 10

not change the money supply because banks already have excess reserves which they cannot lend.

As borrowing money from banks will become difficult people will start depositing more money with the banks.

There will be a sharp increase in the deposits made by the business firms as the rates of loans given by banks has fallen sharply.

None of the Above

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